He mentions some reasons on his site, actually.

Let me start by explaining that JPEGs are compressed. You probably know this already. You also probably know that the compression is visible at higher levels, as you can see from any JPEG of smooth text. One fatal flaw in dealing with compressible pictures is they can tend to get compressed multiple times because maybe you take it, then Bob crops it, then Joe adds text to it.

Now let's say you take a picture with very little compression, and I photoshop in a big ole penis that was actually compressed quite a bit. The purpose of his software is to detect that they have different compression levels and outline those areas.

People often fail to understand this when linking to ELA and will assume it can detect if one image is edited all by its lonesome. Let's say I take a picture of some chick and make her tits bigger. It's still the same image saved the same number of times at the same compression, ergo ELA should not detect any changes.

Furthermore let's say I take two photos taken by me on my camera and immediately blend them together. Again, they're the same level of compression and will not show up as faulty.

Other things to look out for are whether or not the errors are transferred in a way which can retain them. In this situation the butt is warped so harshly to the balloon I'd doubt any of the artifacts from JPEG compression are visible. Other things such as blur tool or sharpening can disrupt them as well.

The last reason it's faulty (and this is noted on his site) is that JPEG naturally compresses the color red very poorly. Even a little bit of red will suddenly get tons of jaggies relative to the rest of the photo, and thus his tool is often simply a "red detection analysis" rather than an error level analysis.

Also, in case you're curious, the reason red is often neglected by JPEG and cameras alike is that we as humans are very sensitive to the color green but not very to red. In fact, if you were to take your camera apart and examine it you would find there are just as many green pixels as red and blue combined.