In the end, there is no single "best" part of the lane. A trained biker will divide his lane into thirds; left, center, and right. The best place to be depends on the factors in the riding environment at that moment. A motorcycle is much more sensitive to environmental factors (road surface, wind gusts, etc.), and a biker is obviously much more vulnerable in a crash.
Some people might see a biker shifting from one side to the other and wonder what the heck he's doing. He may have gone to the left to avoid a gravel patch and then to the right to get out of the windblast from an oncoming 18-wheeler.
If there is a car on the right ready to pull out from a stop sign and another coming toward you with its left turn signal on, taking the center of the lane would give each hazard equal space. Of course the center is to be avoided if there is evidence of significant car drippings.
I'd guess that the rider you described hasn't been trained in an MSF course. My wife can pick an untrained rider in traffic pretty easily.