In short, the error stems
from the fact that GA uses timestamps to record page visits, bounces and exits. If a user lands on Page A at 3:15, then Page B at 3:25, Google determines time spent on Page A as 10 minutes. But if a
user exits a site after going to Page B, GA can't calculate how much time they spent there, because there's no tracking data on the next page--whether it's a competitor's site or something random like
an email homepage.
This skews your time-on-page metrics for every page that gets recorded as an exit page--and could lead you to believe that Page B, for example, is a poor converter, has poor navigation, etc.--when it really is just not getting credit for how much time users actually spend on it.