It is really use:
- as a new player you start at ELO 1250. You should have started at 1500 but as new players are often dreadful it was decided that for balancing purposes to start them at 1250
- however, you are still 250 short. So each game you play - whether you win or lose - you gain some amount of ELO until the 250 is up
- for each game, you gain (if you win)
and lose (if you lose) more ELO than more experienced players (experienced player does not mean better, there are some experienced players with ELO < 1200)
- so, for each game you play you get:
a portion of the 250 ELO you are still due + ELO due to win or loss.
The big idea behind all this is that after playing a number of games (say 20) the ELO system has a good idea of how predictably good/bad/mediocre you are and your ELO will more or less reflect that. After all, your ELO rating is correlated to how good/bad/mediocre you are *on average*.