It could theoretically be placed anywhere on the piece of metal which would normally be oxidized. Hm, i would have to go into chemistry with electron transfer, galvanic cells etc (thats how it gets "battery effect" nomenclature), but the basic idea is this:
You can create a list of elements in order from "easiest to react with" to "hardest to react with". Now, rusting, the process of oxidation is really just the transfer of electrons/protons (what do they call it these days? I think electron pair transfer is called bronsted-lowry model, and proton is the more general term...but its a bit fuzzy) from one element to another. In this case, I believe it is from the copper to the aluminum, but it could be vice versa. Similar to the list of easiest to hardest to react, you can create a list of which elements are most easily oxidized, and which are most easily reduced (oxidation is gaining electrons, reduction is loss of electrons (o.i.l.r.i.g...the one thing i remember lol)). If the two elements are at opposite ends of the spectrum, they will very easily create a redox reaction - which is what is happening to the copper and aluminum. The copper is reduced, while the aluminum is oxidized (or vice versa...ill think about that later). Now, if you throw in something else, which is even further at the end of the spectrum, the situation changes. Say the list is 20 elements long, 1 being easily oxidized, 20 being easily reduced. Say aluminum is near the top, at position 3, while copper is near the bottom. Lithium, however, is number 1, so copper would "rather" get electrons from lithium than from aluminum, because there is a greater difference between the two (i believe the difference in this case is measured by electronegativity). So, the bottom line is that copper reacts with the lithium instead of the aluminum, regardless of what is in between it - as long as it has an electrical connection (in this case, through the water), it will do this.