Actually, the laser goes through the side you think it is reading and reads the back of the labeled surface.
Think of a CD as like a mirror. The label side is against the wall. The part you show to the laser is the side you look at the mirror from. If you scratch the back of the mirror, you can't see in that spot. If you scratch the labeled side of the CD, you ruin the CD. If you scratch the side of the mirror you look at, you also cause problems for looking in the mirror. If you scratch the side of the CD that the laser is looking at, you ruin the CD.
I have a feeling I'm not explaining this very well, but I don't know how else to explain it. Somebody?!?!?