I think it's to do with having automatic dissolves or other transitions when you send several events to the time line.
If, say, the overlap, which is the transition, is set to 1 sec, it can be applied so that:
The right hand event is in effect dragged to overlap for 1 second over the left hand (=before cut)
or
The left hand event is dragged for 1 sec over the right hand event (= after cut)
or
Both clips are dragged for half a second over each other (= centre on cut).
So it affects the timing of exactly when the transition happens.