This is best illustrated by an example:

1. Imagine a laptop with intel video (for the sake of xrandr output names).
2. Start in single-head mode.  Open some windows.
3. Plug in an external monitor.
4. Enable it with xrandr --output VGA --above LVDS

Expected behavior:

All existing windows stay in place.  New empty desktop space appears on the external monitor.

Actual behavior (compiz 0.6.2+git20071119-0ubuntu1~gutsy1):

Your laptop panel becomes empty.  All existing windows move to the external screen.  This is quite disconcerting.

This also happens if you do xrandr --output VGA --left-of LVDS in step 4.  You get the expected behavior only if you use --right-of or --below.

Aside: --left-of and --right-of are often not a practical option due to the 2048x2048 texture size limit shared by many drivers, unless both your screens happen to be 1024x768.  And --below makes no little sense on a laptop.