MONSTER POPULATIONS AND PLACEMENT
This section, and the few that follow, are actually a bit disappointing; though there are a few gems to be found (and I will address them) the sections largely consist of Gygax rambling on at length about the proper use of monsters, money, and magic in your campaign. The reason the sections are disappointing is because even for a new DM, most of the advice given herein is common sense, though in today's landscape, some of it is actually worth mentioning. That is, we now live in a society where "gamers" are commonly thought of as people who play WoW or are PS3/X-Box junkies, not tabletop RPGers.
In such a world, it is, in fact, important to note that in a believable fantasy world, monsters don't re-spawn.
What is perhaps incredible is that Gygax thought to mention this back in 1979, decades before the fantasy CRPG phenomenon was to erupt.
Also of interest is Gygax's assertion that the random monster encounter tables are not meant to be used all the time, in every situation, but only in specialized and emergency situations. Constant use of these tables creates what Gygax calls a "Disneyland" atmosphere, or what today we might call "Gonzo" gaming. He mentions that continuous use of random encounter tables makes it difficult to maintain long-term play, as the overall then lacks rhyme or reason upon which to build and expand the milieu. An interesting statement that makes sense, though I'd argue if you have a group of players who don't care about rhyme or reason, then it's entirely possible to maintain long-term play in such a campaign--the key is that nobody looks too closely to question why so many variant creatures are existing in relative harmony, and why the wilderness never seems to run out of monsters.
One of the things Gygax mentions here which is key to a good D&D setting speaks to the necessity of the DM to map out the populations (at least in general) of a given area. The reason for this is that when PCs move into the area and begin slaughtering monsters, they will eventually depopulate the region of hostiles. This will necessitate them moving on to continue to seek their adventure and fortunes elsewhere, a situation that most NPC societies will eventually welcome, lest these powerful and wild adventuring types become tyrants that seek to rule over them.
Think, for example, of the classic starting adventure scenario--B1: The Keep on the Borderlands. This is in actuality less of an adventure module than it is a starting point for a campaign setting. The area surrounding the Keep is stocked with various areas of adventures, of varying challenge levels, but each has specific treasures and monsters within its area. Once the PCs have gone through all of these areas, killed all the orcs, and taken all the treasure, what is there left for them to do? They could retire, certainly, but given that B1 is a low-level module, that seems disingenuous. Gygax points out that monsters will not simply re-appear in areas previously cleared--migration, as he puts it, is slow. The rationale for this would seem to be that obviously (despite PC misconceptions) monsters aren't that stupid. They are at least intelligent enough to not want to move into an area where word has it their kin and kith were all slaughtered.
Again, for a gaming group reared on World of Warcraft this sort of approach will be alien--consider a "group" quest in an MMO, where a number of characters undertake the same quest, to kill a certain monster and acquire his treasure. Instead of working as a group to kill the monster, and returning the treasure as one, they have to kill the monster and get its treasure one time for each character in the group, waiting for the monster to "re-spawn" after each killing. This, perhaps, is an illustration of the key difference between computerized "role playing" games and tabletop role playing games--in the latter, we see a single quest with a single goal, truly shared by all the players. In the former, each player has his own quest which may or may not be identical (though not truly the same, as evidenced by the need to kill the "big bad" multiple times to obtain multiple spawnings of identical treasures) as the quest by his adventuring partners. The idea of adventuring parties in computerized RPGs is more of a transparent illusion than the shared story created by a group of tabletop gamers playing in the DM's sandbox.
Another piece of advice that Gygax offers in this section, which is of particular interest and often overlooked by AD&D players and DMs, is that the DM should "Alter creatures freely, remembering balance. Hit dice, armor class, attacks and damage, magical and psionic powers are all mutable; and after players become used to the standard types a few ringers will make them a bit less sure of things." (91)
In case you're missing the obvious point of that statement: Orcs can be a deadly challenge to fifteenth-level characters. This, incidentally, is one of the core stated design goals of the in-development D&D 5th edition.
People tend to feel that monsters were too static in older editions of D&D, that an orc is an orc is an orc, but clearly, the stated intent is that it does not have to be so. Every DM should keep this vital piece of advice in mind, if for no other reason than to see the look on the face of the fighter's player when you inform him that no, in fact he does not get his multiple attacks against this particular group of orcs.
Finally, after an example of population and placement (and a pretty good one that demonstrates you can do it in a single paragraph), Gygax recommends approaching the wilderness in much the same way as you would a dungeon, with a matrix and keyed encounter areas. Again, see B1 for a good example of this. And remember, "It is certainly more interesting and challenging for players when they find that monsters do not spring up like weeds overnight - in dungeons or elsewhere. Once all the dragons in an area are slain, then they are out of dragons!" (91)