The epicycles model represents one arbitrary periodic function as the sum of multiple well understood periodic functions (uniform circular motion, i.e. complex exponentials). This is the same idea we use in a more systematic way today by way of the Fourier series, etc.

It's quite a good method for approximating any arbitrary smooth periodic function.

My best guess is that the originators of this model (perhaps as early as Hipparchus, but at any rate someone by the time of Ptolemy) didn't think there were literally circles being combined, but had a pretty clear idea that they were trying to make an approximate model to fit the data. A previous model, from Eudoxus, was also probably pretty accurate but more cumbersome to compute with, involving approximation of the visible planetary motion by the combination of uniform rotations of some imagined sphere(s) centered on the earth. (We don't know exactly because the books about it don't survive, so all we have are vague descriptions by other people.)