The fundamental aspect of ENY is that it is compensating for more numbers on one side without forcing players to another side. You might be forced to fly a P-51B instead of a P-51D, or an La-5 instead of an La-7, but the side you fly on has X% more players. Logically, there is a good chance you'd have more friendlies in the fight with you. The rationale is that an La-5 + P-51B vs. a P-51D (or insert any low ENY value plane here) is considered "fair".
I assume that ENY rarely gets high enough to force people into "crap planes" (at least as far as the MA is concerned) like the C.202, 110C, or P-40C. I'm talking higher than 30. I'm sure Lusche could provide more numbers info. I also believe there is an upper limit to the max ENY number, but no idea what that is. 31 maybe?
Most multiplayer games have some sort of side balancing in place. Most force you to another side or don't let you join a particular side upon entry. ENY is a decent compromise. There's a server in IL2 that has no side balancing and is often 2:1, sometimes 3:1, and it isn't real fun getting piss pounded by Tempests and Ponies every sortie.
I do think that players should be able to switch to the lower # side at any time. That would alleviate a lot of issue. I don't really care what side I fly on, but I don't like the auto-switch because sometimes it pulls you away from a good fight.