It means the client controls his position , not the server.

Its bad because it makes cheating easy. Someone can make 'speed' or 'teleport' hacks.

The only way this could work is to make the server force the client to move at a certain position if the client moved too far during the last update, exceeding the predefined maximum client speed, for example.

But this way you must have a reasonable fixed speed for all entities. Otherwise if you're making a game with a slow warrior and a fast rogue, the cheat comes into play, making the warrior as fast as the rogue, but twice tougher...