There are a few tutorials that cover this topic including content scaling, the ultimate config.lua (which really should be replaced by) and the Modernizing the ultimate config.lua tutorials
https://www.youtube.com/watch?v=RwVlzJtQWd8
https://www.youtube.com/watch?v=QCU_G3GCerg
http://coronalabs.com/blog/2010/11/20/content-scaling-made-easy/
http://coronalabs.com/blog/2012/12/04/the-ultimate-config-lua-file/
http://coronalabs.com/blog/2013/09/10/modernizing-the-config-lua/
This should help you understand all of this. But basically to sum things up you can either have:
a) a fixed content area (i.e. 320 x 480) knowing that 0, 0 will not likely be the top, left of the screen and display.contentWidth, display.contentHeight will likely not be the bottom, right. Corona SDK has API’s to get the difference between 0, 0 and the top, left. But basically on a wide device like an iPad, the left edge will be a negative value like -20. On a tall device like an iPhone 5, the top will be at -44.
b) use a content area that changes on a device by device basis that makes sure 0, 0 is top, left and that display.contentWidth,display.contentHeight are bottom, right. In this case you position things relative to the center or the edge and things can move depending on the devices shape.
In both cases, your background should be big enough that it covers all devices. If your core content area is based on 320x480, the recommended background is 360x570. This covers most all devices. Understanding that depending on the device some of the background will be off screen and the background must be designed around this.
Rob