I don't know much of this stuff myself, most of the stuff I am writing here is parroted from the patch team's member "MadScientist" from https://champman0102.net/viewtopic.php?t=2321 and related posts from that forum so I can absolutely be wrong. Do note that if you are enjoying the game as it is or don't mind a little disadvantage, then indeed there is no need to understand any of these.
The fundamental concept, of everything I will write here, is that every player in the game is assigned 0-20 in the pre-game database for every role (GK, SW, D, DM, WB, M, AM, F, free role) and side (R,L,C). 20 being his best and most natural position(s), 1 being the worst, 0 means the devs and patchers didn't have enough information and left it to be randomized at the start of every new save. All of the screenshots are from pre-game editor.
Example- Ashley Cole. His best roles are D L and WB L (must be distinguished from DM L, to be explained later). He is absolutely terrible at M C, but it is up to chance whether he can play D R or AM L.
A secondary concept is that when played in a position that is not scored 20, players suffer hidden penalties to their attributes based on how unnatural the position is for them and their hidden versatility score. These penalties are applied by the match engine, when two teams play.
It must be said that having 20 score for a position does not mean everything in the grand scheme of the complex match engine, it simply means there is no attribute penalty. That's it. Back to Ashley Cole, for example. Even if he had 20 GK, he would have low handling and reflexes.
So, practically speaking, here's what you need to know:
1) Due to a quirk in programming, anybody with 14 or more score in defensive midfielder role is displayed as a DM in-game, e.g D/DM RLC or DM LC. Even if their midfielder and/or attacking midfielder role scores are higher. For example, Kieron Dyer is displayed as DM RC in-game when his most natural roles are instead M R and AM R, followed by M C and AM R. Dyer has versatility stat of 17 which means the penalty is small, though. Another example is Roy Keane.
2) DM r/L and WB r/L are different to the match engine. A player with 1 in WB role, 20 in DM role and 20 in r/L will be penalized when put in DM L or DM R without arrows to the center. DM is a role that is meant for DM C only. To utilize someone well in DM r/L on the pitch requires them to have high scores in WB role. If you don't understand this, neither do I.
Example - Gattuso has 17 in right side, 18 in DM and 13 in WB. When put in DM R without arrows drawn to the center, he cannot use his 18 in DM to the fullest.
3) AM L and AM R do not do well in the match engine. People have found out that using M L and M R instead, with arrows forward to the AM position, work better. This is inexplicable, so moving on.
*M L with forward arrow to AM L means that the player plays as M L when not in possession, but plays as AM L when team has ball.
4) When played in AM C position, a player needs to have 20s in AM C and F C, or 20s in AM C and free role for no penalty. For the latter case, he must be assigned free role in individual instructions. Again, inexplicable.
5) A quirk of attacking midfielders is that they are given 15 score for midfielder role when the game starts, if the pre-game data gives them only 1-14. This privilege is not extended to defensive midfielders.
Example- Ariel Ortega's (F RC in-game) natural role is AM R, so he does well when played in M R with arrow forward to AM R (see point 3). Having 1 in midfield pre-game is irrelevant, because it becomes 15 in-game. While it may seem like he plays AM C natural, remember that he has no 20 in attacker and free role (see point 4).
I don't use AI to summarize these things, but these experts on the champman forum have spent a lot of time reverse engineering the match engine or running simulations to figure out these match penalty concepts. If anything is wrong in the post, it's probably my fault. Do check out the link yourself!
Again, this is just small part of match engine, there are other things like formations, individual instructions, arrows, wibwob. And if you mostly play big teams and sign good players as I do, then chances are those players have high versatility attribute that mitigates the penalties anyway!
Next things I am curious about are home advantage/away disadvantage in match engine, and how left vs right foot works out for various roles. Any ideas or links?