I guess I have no idea how it works either. I thought all model groups were dynamic.
They are. Just the Horizontal/Vertical by model options use the order of the models in the group when creating their buffers. That's the reason (one of) that the "Models in group" list has the ability to move models up/down.
As an example, say you have 5 pixel candy canes, each with 25 pixels. With the "Grid" options, you'd have them placed on a 400x grid based on the preview. That's awesome for some effects. However, for others, that's not ideal. For example, a morph going "up" would go up the candy cane till partway up and then the bottom of the hook would start and continue up meeting at the top. And if the canes are staggered in the preview, it wouldn't work well at all.
Instead for the Vertical, you would instead get a 25 wide by 5 tall buffer. (this would be identical to 5 25pixel arches) A morph to the right would loop up all the canes and then around the hook. The Horizontal is a 5 wide by 25 tall so the morph up would work. A "Single strand skips" effect would work well on the Vertical alignment as it would look just like it does on the arches.
In anycase, the "order" of the models would affect which order the canes would be added to the buffer. Thus, you can have different groups with different orders.
Hope that explains it.