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Lookup field / Picklist or Entity

FIrst let me mention I am not a CDS or Relational Database expert and most of my knoledge comes from Access bacj in the day.   I am trying to wrap my head around Picklist in CDS.  If I was building a relational database I would have on table with an ID column and a value column (example: locations) and I would have another table with sales data where one on the columns is the location ID.  You could then create a query to get the location name and sales data together.   The would prevent repeating the same location information over and over again in one table.   Why do we not do this in CDS or should we.  Is there a speed difference in PowerApps for creating entities insted of Picklists?

 

I am having an issue with dropdown and display fields in PowerApps caused by Lookup fields and I am not sure if entities are a better option.   I am thinking they are not but looking for a technical reason to wrap my head around.   

 

Thank you