There are two types of way of figuring out what you are looking at with a camera. The more advanced (and common sense) way is known as "TTL" which stands for Through The Lens. With this in mind and use of mirrors and a prism the image comes through the lens to the viewfinder for our eye. Realize that not all viewfinders give 100% viewing area, but all but a very few give at least high 90's.

The other way to figure out what you are taking a picture of is to provide a secondary view finder that allows people to get an idea of what the photograph is of without looking through the lens. These are often above or just above and to the side of the lens itself. The primary advantage for these is simplicity and cost. It takes up much less room and doesn't require a mirror or prism to divert the light to your eye.

With a non-TTL viewfinder, it is the case that you are not looking at the exact same image as the lens is. This is known as parallax. Our eyes and brain use this naturally to give us depth perception by integrating two different pictures of the world - one from each eye. However, in a photographic system this is not a good thing.

For most cases of things off in the distance this is not an issue, the parallax is very small and not likely to be detectable at all. This becomes more of an issue with things that are up close - framing them properly and the correct layout. Try this - hold up a finger (no, not that finger) about 6 inches away from your right eye. Close your left eye and look at where your finger appears relative to the computer screen in front of you. Now, open your left eye and close your right eye - your finger moved with respect to the computer screen. Parallax error is when you expect to take the picture that your right eye sees and instead gets the one the left eye sees.

The most common form of parallax error is in portrait photography where you look at the eyes of a person but instead get a photograph slightly lower where the subject appears to be staring above the photograph - at the viewfinder.