"Application" is the name of a module in your overall 'application.' At the start, "Application" is the only module, but it is common to add other modules: you might have a module for "Clients" and another module for "Vendors." The hierarchy of the view folders follows the same hierarchy as ModuleName:ControllerName:ActionName, and ZF needs to use the module name in the view folders hierarchy in case you happen to have identical controller and action name pairs in two or more modules. It is likely that a "Clients" module and a "Vendors" module will both have an "index" action. It is less likely that the two would have identical controller names but it's not completely out of the question. If you had a controller named "Contacts" in both a "Clients" module and a "Vendors" module, "contacts/index" isn't enough information to tell ZF which view to use. It needs the module name in the folder hierarchy to distinguish between "clients/contacts/index" and "vendors/contacts/index".
UPDATE
Something to wrap your head around is that ZF3 takes things like router definitions, view folders and who knows what else from all of your different modules and aggregates them into a single structure. In other words,
module
Application
view
application
add
add.phtml
delete
delete.phtml
edit
edit.phtml
index
index.phtml
module
Clients
view
clients
add-client
add.phtml
delete-client
delete.phtml
edit-client
edit.phtml
client-index
index.phtml
module
Vendors
view
vendors
add-vendor
add.phtml
delete-vendor
delete.phtml
edit-vendor
edit.phtml
vendor-index
index.phtml
gets recognized somewhat like this:
module
....
view
application
add
add.phtml
delete
delete.phtml
edit
edit.phtml
index
index.phtml
clients
add-client
add.phtml
delete-client
delete.phtml
edit-client
edit.phtml
client-index
index.phtml
vendors
add-vendor
add.phtml
delete-vendor
delete.phtml
edit-vendor
edit.phtml
vendor-index
index.phtml
and you could probably put all of your view files into a single module if you wanted to.
Perhaps this helps explain why a folder with the module name is included beneath the "view" folder. The folder with the module name that is above the "view" folder has a storage function. The folders with module names below the "view" folder serve as a means of referencing which modules the view files are associated with in the aggregated definition.