Well, my Strat is pimped with Lace Sensors and so it runs like this:
Bridge: Red (uber hot single, humbucker-like output)
Middle: Silver (fat 70's style single)
Neck: Blue (classic 50's single)
Ok, so...
Position One is all Red, totally hot and with a clean boost or EQ mid-boost is basically a humbucker.
Position Two blends the Silver with the Red and takes a bit of the power away, sounds a bit twangier - great for clean tones.
Position Three is all Silver, great for rhythm because, as already said, it's slightly more trebley than the neck but not too much. Nice fat sound.
Position Four is Silver and Blue, it's a more bassy sound, good for solos, but it has a little extra treble.
Position Five is all Blue, classic neck singlecoil sound. Sounds immense clean.
So, if I were writing a general Strat-y song at home I would use P2 for rhythm and then either P1 for hawt solos or P4 for something more mellow and "blues" like.
Hope that helps. :)
