Standing on the pegs effectively lowers the center of gravity of the bike/rider from seat height to the lowest point on the bike besides where the tires touch the ground or, I suppose, the wheel axles.
It might not seem like it when you're standing up, but it's true because all your body weight is now transferred to the pegs, not the seat. I've found that it makes it much easier to negotiate surfaces like large rocks, etc.
If you're sitting down and the bike starts to move/jerk/lean back and forth, your mass/weight is imparted and added to that movement kind of like a pendulum. If you're standing up, your mass/weight, resting fully on the two foot pegs that are only about a foot apart or so and a few inches above the ground is kind of negated, depending on how much of a death grip you have on your bars. If you just let your bike do its thing, momentum and the gyroscopic forces of the wheels/tires will pretty much keep it going in a straight line as long as you're going fast enough.
Only drawback to standing on the pegs is, once you start going over, it's very hard to get a foot off the peg and get a leg out to stop yourself.
My rule has always kind of been that if I'm going fast enough for the inertia/momentum of the bike to work, I stand up. If I'm going slow enough that it doesn't really give me an advantage, I sit down.
If you have the stock rubber footpegs, I would recommend not standing on them in wet conditions.
I really don't know how standing/sitting affects rear wheel traction, but it doesn't seem like it would be much since when you're sitting all your weight is transferred down through the shock to a point not far behind the pegs, anyway.
My rule of thumb is if I'm going fairly fast over obstacles, I'll stand up. If I'm moving slowly enough that I really don't have any momentum, I'll just sit, although sticking a leg out to try to keep my balance might be riskier (potential injury-wise) than just simply falling over.
Last edited by planalp; 05-24-2012 at 12:26 AM.