Baby's head is built of soft cranial bones and sutures, that are liable to get deformed on pressure. When a baby sleeps on supine or on back for long duration, there is continued pressure on the back of head, occiput area, causing flattening. This is caused by babies head weight. Sometimes even sores can develop if positions are not changed. This condition where the baby develops positional asymmetry and flattening of the head is called Plagiocephaly.
Although the plagiocephaly has been linked to learning problems as children grow  as well as Visual defects  , the studies have shown conflicting results. Nevertheless , the problem is sometimes a big concern to the parents.
Here is one video addressing the issue, Since the "Back to Sleep" Campaign was launched in USA against Sudden Infant Death Syndrome, the deaths decreased significantly but with it increased the incidence of flat head syndrome by 5 folds.
Pediatricians suggest frequent positioning of the baby to avoid pressure on same spot, increase on-stomach play time ( Tummy time ) while child is under supervision and even helmets have been introduced.
When to really get concerned has been a question for parents.
If the flattening is severe, immediate consultation is required. Severe cases may require Cranial orthotic therapy.
In mild cases, get advice from your doctor. Frequent positioning and adequate tummy time may be sufficient.
1. PEDIATRICS Vol. 105 No. 2 February 1, 2000 , Long-Term Developmental Outcomes in Patients With Deformational Plagiocephaly Robert I
2. Visual Field Defects in Deformational Posterior Plagiocephaly R. Michael Siatkowski, MD
JPO Journal of Prosthetics & Orthotics: