If you want a cascaded lookup to give the user only choices in a dropdown that apply for a choice earlier made you can configure that in your form.
In this example we want to filter regions based on a pull down menu from a list of countries. Therefor we have a list with countries, and we have a list with Regions, that has a lookup to the list with counties, like this:
You can configure a cascaded lookup by selecting the filter all the way to the right in the behavior tab:
Using the Query editor you can create the cascaded lookup:
Now the result is that if you select a country, only the regions for that country are visible:
In this video you can see how cascaded lookups can also be used to filter lists with over 5000 items: