Placement and amount of Windows
Windows serve a multitude of purposes- they provide daylight, they provide passive solar heat, the provide ventilation and they provide a connection between inside and outside. On the down side, they are poor insulators and do not provide any privacy. Compared to insulated walls, even the best windows available lose anywhere from three to ten times as much heat through them, depending on how you do the comparison, and so windows need to be used very wisely. The shape of the house must be designed with windows in mind so that each room can have sufficient daylight, and so that passive solar heat is taken advantage of without incurring excessive heat loss.
Windows exist both inside & out, so placement affect both the "look" of the exterior as wall as where affecting how furniture can be placed in a room. Traditional buildings placed them according to where they looked good on the outside (generally on a very regular pattern), with no regard to how they work inside. One way to get light coming from two sides of a room and not have a big impact on furniture placement is to use smaller windows with high sills. Windows act as a connection between indoor and outdoors, so the outdoor space should reflect the usage on the indoor space as well (see positive outdoor space).
Energy Performance Issues
Every house is a passive solar house to some degree, only if its not designed that way the result is some combination of not capturing the available winter heat, and capturing too much of the summer heat. While fully passive solar heating is a challenge, getting a sizeable chunk (25-50%) of your winter heat is quite easy (assuming it is available at the site). Details on this are in the solar section.
Most people find daylight preferable to any kind of electric light, and like solar heat gain, it’s a free resource that should be taken advantage of it whenever it is available. Even on a cloudy winter day, there is significantly more light outside than there is in a room lit with electric light, and on a sunny day there is many times more light yet. Our eyes are amazingly adaptable to a wide range of lighting conditions, but for tasks like reading, they operate best in the mid ranges. Where an overhead electric light is often too dim, direct sun, or even a bright cloudy day is too bright for reading.
Issues of daylighting are normally only dealt with superficially in residential construction, and unlike other aspects of design, there are no available formulas to calculate window size based on daylight requirements. As a result, the only alternative is to rely on experience or build a model and measure how it performs. Either way, the amount of window area in a room should be sized to provide a reasonable amount of light. The general rule is that never build any space that is more than 12-15 feet from a window, since that's as far as light penetrates, and always try to put windows in a room so that there is a window facing in two or more directions, so as to prevent dark shadows and create a more even, diffuse light. Of particular concern to anyone trying to maximize passive solar gain is the problem of excessive amounts of light due to large glazing areas.
Aesthetics/Function
Windows create a connection from inside to outside, and the degree of that connection is determined by both the size of the window and the height off the floor of the windowsill. A sill height of 4’6” will create nearly total privacy, but very little connection with outside, while a sill height of 12” will make the outside feel part of the room, but provide no privacy. Bringing the window sill all the way down to the floor does create a greater a connection with outside, but also decreases the sense of being protected.
Views are wonderful, but by making a view broadly visible from many places in the house by using lots of glass reduces its specialness. Instead pick an area or two, make the view a centerpiece of those areas, and let all the other windows be the size they need to be, ignoring the view.
As with daylighting, public spaces tend to want a greater connection to the outdoors, while private spaces want a lesser one. People like to be able to watch the weather, see who is walking by, and enjoy the landscaping, and so having some windows with a low enough sill allows this. Keep in mind that a very low sill can make you feel exposed, so there is a tradeoff there in determining sill height. When the outdoor landscaping creates a natural privacy barrier, the windows in private spaces can be opened up to it, creating delightful spaces, but few urban lots allow for this luxury.
There are two locations for windows that tend to be undesirable: in a shower where the water will always splash onto the sill, and above the headboard of a bed. The first is because those windows collect mold and rot, and the second is because on cold days, there is often a cold convection current coming off windows (using R5 or better windows reduces this much. Alternatively you can use window coverings, although the air tends to leak around them anyhow).