Question about events

I have a question about implementing an event system - perhaps someone can
answer this...

BACKGROUND:  Window systems such as X and Y have event systems that notify
client apps when certain events occur.  Some of these notifications are easy
to program, such as key presses and mouse clicks - when the keyboard driver
or mouse driver tells the server that a key is pressed or the mouse is
moved, then the window system simply sends a "keypressNotify" or
"mousemoveNotify" event to the application.  But other notifications seem
very difficult to implement, for example "enterNotify" and "leaveNotify"
events.

QUESTION:  How does a window system know when the mouse enters/leaves the
bounding box of a particular window/widget, especially since these
windows/widgets are nested within one another?  Does the window system have
to test the mouse cursor location against the bounds of each window/widget
*every* time the pointer moves?!?!  That seems like an awful lot of work if
there are a lot of windows/widgets on screen.  It also means a lot of if
statements, which means it's terribly inefficient on a pipelined processor.

How do window systems implement enterNotify and leaveNotify event
notifications?

-- MC