The core concept to understand about encap, is that each package that you install is meant to live in its own directory. The directory that the entire package lives in should be the name of of the package. The encap program will take care of making links into the directory that the package lives in, so that users can easily access the programs.
A package directory should have the same structure as your target directory. To make the explanation easier, I will assume the place where all your package directories live is /usr/local/encap. You're target directory would be /usr/local. The goal is to be able to tell users to /usr/local/bin in their path and make all the software available to them.
Gnu software works especially well with the encap system. Therefore I will illustrate this with an example installation of less-3.2.0. The package directory is called /usr/local/encap/less-3.2.0
dir: /usr/local/encap/less-3.2.0/bin file: /usr/local/encap/less-3.2.0/bin/less file: /usr/local/encap/less-3.2.0/bin/lesskey dir: /usr/local/encap/less-3.2.0/share file: /usr/local/encap/less-3.2.0/share/less.hlp dir: /usr/local/encap/less-3.2.0/man dir: /usr/local/encap/less-3.2.0/man/man1 file: /usr/local/encap/less-3.2.0/man/man1/less.1 file: /usr/local/encap/less-3.2.0/man/man1/lesskey.1
The encap program will make the directories and links to the files in /usr/local. /usr/local/bin/less would be a link to /usr/local/encap/less-3.2.0/bin.