The first thing to understand about daylighting is that it can do more harm than good if poorly managed. Windows placed with little thought given to the sun can lead to high contrast and harsh glare, spaces that are uncomfortable to the eye and lighting that is ill suited to most tasks. To create relatively even, soothing and useful light, there are a few basic concepts that you should grasp: direction of light, changes throughout the day and seasons, color temperature, contrast and diffusion.
Diffusion is the relative uniformity of light in terms of directionality. If all of the light in a space is moving in one direction there is no diffusion and the contrast is very high (imagine a room lit with only one flashlight at night). If the light is moving in every direction evenly, then the diffusion is very high and there is no contrast (imagine a room with many lights on all over, with bright walls and many mirrors).
Very diffuse, low contrast light from many sources
High contrast, no diffusion, single light source
Color temperature refers to the exact color of a light source. Most light sources are considered "white," but there is a clear color difference between a fluorescent bulb and an incandescent bulb, or between sunlight and the light of a campfire. In general, if the light is more yellow, red or pink, it is thought to be warm. If the light is more blue, green, or gray, it is thought to be cool. As an exercise, think of the difference between sunlight outside at sunset vs. fluorescent light inside. Not to say that cool is bad and warm is good, sunlight at midday is considered "cool" because more blue light is produced than any other color (that is why the sky appears blue). Instead think of it this way: 'warm' light is cozier and more comforting, a wood fire (campfire or fireplace) produces a very warm orange glow. Cool light is brighter and more vibrant, more energetic and dynamic.
Next, it is important to understand the course of the sun through the sky and how that course changes from season to season and your latitude. Everyone knows that the sun rises in the east and sets in the west, but fewer people know (though I think you all went over this in 5th grade) that the sun is slightly to the south of us in the summer, and more obviously south during the winter (opposite south of the equator). In the summer, the sun is closer to being directly overhead at noon, so everything casts a very small shadow just beneath itself. In the winter, the sun is lower, close to the horizon at noon, and so everything casts long shadows to the north. This effect is much more pronounced the further away from the equator you are, and almost non existent on the equator.
Finally, by direction of light I mean the cardinals: north, south, east and west. The quality of light coming from each of these directions is dramatically different, and also changes to a degree based on time of day. The qualities of northern and southern light are also flipped north and south of the equator, this description is for the Northern Hemisphere (because I and everyone I know lives up here).
As a general rule, light from the south is very direct, very bright, creates high contrast and sharp shadows. Windows in southern walls get the most light throughout the day (and the most heat gain as a result) but that light is also harsher than any other. Northern light, as you might have guessed, is just the opposite. Much less light comes through these windows, but the the light from the north is extremely diffuse, creating much less contrast and shadow. This is because Northern light is all reflected: off the sky, the earth, the water, and anything else you can see from the window, and therefore is coming from every direction at once instead of from one specific source. The result is soothing, even light, and northern windows generally provide the best views.
Eastern and western light are most affected by time of day. Because the sun rises in the east and sets in the west, an eastern window will be like a southern window (direct harsh light) in the morning and a northern window (less light, more diffuse, great views) in the afternoon. A western window, obviously, just the opposite: diffuse light in the morning, harsh and direct in the afternoon. One more important thing about east and west windows, however, is that the color temperature changes drastically at dawn and dusk.
"Well that is all fascinating Gabe, but how does it help me?" Excellent question. Now that we have a general understanding of daylighting it is easier to discuss solutions to real world problems, starting, for Kim, with southern windows.