The Paste command puts whatever is in the Clipboard from the last «Copy» or «Cut» command into the current image. The pasted section becomes a «floating selection» and is shown as a separate layer in the Layers Dialog.

If there is an existing selection on the canvas, it is used to align the pasted data. If there is already a selection, the data is pasted using the selection as a center point. If you want the selection to be used as a clipping region for the pasted data, you should use the «Paste Into Selection» command.