This circuit uses the IC as a clock, in that the output pulses are counted. The counter in this case is a 4017 decade counter where each clock pulse advances a high from one output to the next. The clock is connected to the hourly cycle output so the outputs indicate hours.
It is important to note the need for the inverter at the clock input. This is because the counter advances on the rising edge of the signal and this happens halfway through any outputs cycle, so an inverter must be used, or a counter that advances on the negative edge. Without the inverter the outputs would go high after 0.5hrs, 1.5hrs... etc instead of 1hr, 2hrs, 3hrs.
A switch can be connected to select any outputs to trigger an alarm or a device of some sort.