When you call your makeAdder(5), it returns the reference to a new function.
function(y) {
    return x + y;
};
So add5 keeps the reference. After it when you call add5(2), you pass the 2 to the function. In it when it wants to return x + y, it starts to find the variables. Starting from x, it looks and see's that the x is not defined in it and goes to the scope in which inner function was defined ` here 
function makeAdder(x) {
  return function(y) {
    return x + y;
  };
}
It see's than x was defined here, because you call and pass x during var add5 = makeAdder(5);. After it goes to find y and finds in it's scope. And after all returns x + y.
The idea is this, every function has a reference to it's creater (where it was defined) and when it doesn't find a variable, it goes to find in it's greater and so till to global scope.