This paper discusses the compositional aspects of the lunar regolith in terms of regolith dynamics. Emphasis is placed on problems concerning lateral movement and mixing of soil components in response to meteoroid bombardment, and on the source of apparently exotic material in mare soils. In particular, it is shown that there are contradictory lines of evidence concerning the efficacy of impact-related lateral transportation of regolith components. Most of the compositional diversity of regolith in the lunar highlands and at the margins of mare basins can be accounted for by comminution and mixing of local rock types with relatively minor lateral transport. In contrast, the mare regolith contains substantial amounts of apparently exotic, highland-derived components in addition to the local basalts, implying efficient lateral transportation. In view of these contradictions, it is suggested that these so-called exotic components may be of local derivation, excavated by meteoroid impact from beneath thin mare basalt layers. A consequence of this model is that the mare basins are filled with impact breccias and melts and covered by a thin veneer of volumetrically insignificant mare basalt.