here's an example that might help -- you can allow key A to own your identity and key B to move your identity to another key. But key B can only move the identity after a time delay if key A does not cancel it. So key B is not your "real key" -- as long as key A is around it is an inferiorly permissioned key. But if Key A is missing then key B becomes the real key.

the key insight is that smart contracts can be used to transmute keys from single points of ownership into a distributed set of permissions.

you can compose a whole set of recovery systems with this primitive - key B could be your ledger or it could be a friend or it could be a third party service that offers "recovery as a service" where you have to call them and prove your identity before they will recover it back to you.