Comment 156 for bug 186382

Anyone tracking this may find this interesting:

 o http://lists.freedesktop.org/archives/xorg/2008-August/038022.html

From that post:

==
 a. Compiz registers for damage events.
 b. Some X client sends a rendering request.
 c. The X server sends Compiz a damage event.
 d. Compiz processes the request and sends commands to the HW.
 e. HW processes Compiz's commands using stale bits.
 f. X driver processes the rendering request.
 g. HW processes X's commands, causing the damage that Compiz thinks it's already processed.
==

So there's the technical description, and it looks like this is being actively worked on by the xorg folks and nVidia on internal bug number 470239 (thanks Dmitriy).