Amorphous solid dispersion (ASD) formulations are widely used for delivery of poorly soluble drugs for dissolution enhancement and bioavailability improvement. When administered, ASDs often exhibit fast dissolution to yield supersaturated solutions. The physical chemistry of these supersaturated solutions is not well understood. This review will discuss the concepts of solubility, supersaturation, and the connection to membrane transport rate. Liquid–liquid phase separation (LLPS), which occurs when the amorphous solubility is exceeded, leading to solutions with interesting properties is extensively discussed as a phenomenon that is relevant to all enabling formulations. The multiple physical processes occurring during dissolution of the ASD and during oral absorption are analyzed. The beneficial reservoir effect of a system that has undergone LLPS is demonstrated, both experimentally and conceptually. It is believed that formulations that rapidly supersaturate and subsequently undergo LLPS, with maintenance of the supersaturation at this maximum value throughout the absorption process, i.e. those that exhibit “spring and plateau” behavior, will give superior performance in terms of absorption.