Halliday & Matthiessen (2004: 331-2):
The Premodifier can then be interpreted in logical terms as a hypotactic word complex.* The Premodifier may accommodate hypotactic word complexes … and word rank embeddings … including compressed phrases and clauses … . The word complexes derive from the potential for logical expansion built into the noun as Head; the embeddings from the functional scope of the experiential configuration into which the noun enters as Thing.
* In previous editions the Postmodifier also was brought into the scope of the logical representation. But this appears to complicate the description without adding further to its explanatory power.