Module positions are placeholders in a template. They are used to identify positions within the template and to tell the Joomla! application where to place output from modules assigned to a particular position.
For example the module position "Left" could be used in the left side of the template to display a site navigation menu. So when a module is assigned to the "Left" position the module will be displayed there.
Ultimately the template designer decides how to use a module position. Therefore not all templates always support or use all module positions. If a module is assigned to a position that does not exist in a template, then the module will not be displayed. Common module positions are "Left", "Right", "Banner" and "Top".