Here is how a parlay works.

A Parlay basically consists of multiple bets combined into 1. This way you get a higher payout if everything wins, however even if one of the bet loses you lose everything.

So now if you have 3 bets , Bet A paying of 2x on winning,  Bet B paying of 2x on winning,  Bet C paying of 2x on winning. Now if you add all 3 bets in a toto or parlay, then if you were to bet 2$ on the parlay, then your winning will be (2$)*2*2*2. Its just combining those odds.

But if anyone of those games was to lose, you will lose everything. In simple terms, it compounds all those bets.