This rule is only applicable during the Enemy: Sail a Boat action.
When the enemy raids a Village, after the Sail (and Deployment) Action is complete, the enemy immediately dedicates each such Village. It does this one-by-one, placing them on the 4 Dedication Actions on the Era Mat. Going from top to bottom, it chooses the action that has the least Villages, and since it is a 2-player game it ignores actions with 2 Villages. It then performs that action (note that this could cause it to raid more Villages). Once all slots on the mat are filled, it no longer dedicates Villages. It will still raid them if it can.