The numbers in the diagram indicate how many times the given formula counts that particular portion of the Venn Diagram. In the first picture, for example, an element in the intersection of A, B, and C will be counted 3 times. Each term of the inclusion-exclusion formula gradually refines these numbers until each portion of the Venn Diagram is counted exactly once.
Best Answer
Venn diagrams can only illustrate simple set relationships; your scenario shows that it cannot handle an element that is also a set.