Module position are labels used while creating a template to help you identify positions in the template. For example the module position "left" could be used in the left side of the template to display your navigation menu. That way you will know that when you assign a module to position "Left" the module will be displayed there.
Ultimately it is up to the designer of the template to use a module position and not all templates support all positions. When you assign a module to a position that does not exist in the template it will not be displayed