The church bounds power on both the top and the bottom.
In William McLellin’s minutes of a leadership meeting held on 2 May 1835 is the following:
President Joseph Smith stated that the Twelve will have no right to go into Zion, or any of its stakes, and there undertake to regulate the affairs thereof, where there is a standing high council […]
— History of the Church 2nd edtition (1976), Volume 2, Page 220
This simple statement established one of the most significant elements of church governance: non-overlapping stewardships. The stewardship over the governing of the established areas of the church, which at that time were called “Zion” or “a stake of Zion,” had been given to local groups called “standing high councils.” The Quorum of Twelve was superior to (and oversaw the operation of) these high councils; and yet they were not permitted to do the high councils’ job.
The fact that there is an upper limit to a persons authority is, I think, widely understood in almost all groups. The local leader does not tell the regional supervisor what to do. But the lower limit is, in my experience, rarely implemented elsewhere (and ocassionally overlooked in the church too). It is common for upper management to not want to be directly involved in what lower management does, but their right to do so if they wish is rarely doubted.
One of the interesting results of this arrangement is that you can’t “pull rank” nor “go over someone’s head”. If I disagree with a decision made by my local leader but that decision is within the scope of that leader’s stewardship, there is no recourse by appeal to the next leader up. A stake president might personally agree that a decision was unwise, and might act to instruct or even replace a bishop that is going astray, but the stake president cannot countermand the decision directly.
This is also one reason why comparing church governance to a business, political, or military hierarchy is inaccurate. The fact that hierarchies are about power where church service is about service is a more significant distinction, of course, but there are people so focused on power that they can’t understand that. But the limitations of stewardship are such that no position has all that much power.
I doubt most members ever give this principle much thought. They might wonder, in an idle way, why they are not automatically released from ward-level callings when given a stake-level calling or the like, but I don’t think most think much past that. I personally find it fascinating.