events will go to the bottommost window which has registered interest.

client A owns window A.
client B owns window B, which is a subwindow of window A.

client A listens for keypress/keyrelease on window A.
keypress on window B -> event delivered to client A, window A.
client B listens for keypress/keyrelease on window A.
keypress on window B -> event delivered to clients A & B, window A.
client B listens for keypress/keyrelease on window B.
keypress on window B -> event delivered to client B, window B.

note client A never receives any event in the last one here, because window B now has interest registered on it.  it doesn't matter that it's a different client.