Your military left!
Ok so maybe that sentence was poorly written.
Observer's Left is place of honor. Normally when displaying the US flag, the union field is to the observer's left. This is why when its hung vertically the way the union field should be to the left as you view it. (wrong way being the union field on the right)
This is the basicaly guideline for flag displays in general. The only two exceptioins that i know of is when flags are displayed in sort of a Fan (then it would be iin the center position in prominance) and shoulder patch displays such as the picture in the OP. Should this soldier happen to have a flag on his left sleeve, it would be displayed exactly the opposite as the one on the right, with the union field to the observer's left.