The menu in a fixed state.
The end result being that when the menu is smaller it's fixed in position and it stays at the same place regardless of where you are on the page as per the screenshot below. Notice that there is plenty of room in between the left menu and the bottom of the browser window.
The menu in an absolutely positioned state.
While if it's taller then it becomes absolutely positioned and scrolls as per the normal behaviour of elements that are not fixed in position. Notice that the left menu items extend beyond the browser window.
As you scroll down the page the left column moves upwards.
You can test this on the page by resizing the browser window to see the menu switch between fixed and absolute mode.
* Please note: because ie6 lacks the intelligence to understand the nature of the fixed position and despite there being some techniques that you can use to encourage it to used fixed positions for elements we have decided to give it an absolute position at all times.
Please note that the Inside Out template has an option to transform the left column so that it is either fixed or scrolls - this has been implemented for use with the panel menu. Given that the panel menu contents are dynamic - the height of the module changes - depending on which tabs are open, it's not possible to calculate the dynamic changes and therefore toggle the left column between absolute or fixed in its position.
If you are using a panel menu that never extends below the browser window eg it only has a few menu items in each panel - then you may like to keep the default behaviour (left column dynamic) otherwise it's recommended to set this option to "scrolling" in order to avoid having the menu items slip below the browser window.