CG is the point of balance in the bike Ėit doesnít matter where or how weight is attached, as long as itís attached. Think of it this way: when sitting, your hips are attached to the seat, the seat is attached to the frame, the frame is attached to the pegs. So how is that really any different than standing, with your hips attached to your legs, your legs attached to your feet, and your feet attached to the pegs?
I believe weight high up makes slow maneuvers more awkward because that weight acts on a longer lever arm to the contact patches, so any lean tends to pull the bike more strongly over. You, the rider thus have to exert greater counter-torque to keep the bike from falling over, making handling more difficult. It doesnít matter how the weight is attached as long as the lever arm is the same length.
When you stand on the pegs like a dirt rider, you still have a weight up high (the CG is raised), but now _you_ control the weight, so you can take advantage of the long lever arm to increase your control Ėit takes less lean to achieve the same counter-torque for whatever the bike below you is doing. Thatís probably why you feel more control by standing on the pegs.
Standing on the pegs also makes it easier to shift more weight. You can put almost 100% of your weight on one side very quickly. When seated, you have to hang off to get the same effect.
Iím an engineer, but not a _real_ engineer.