I discovered this question while using the following guide: https://basarat.gitbooks.io/typescript/content/docs/types/type-compatibility.html#types-of-arguments.
Here is an example snippet of code:
/** Type Heirarchy */
interface Point2D { x: number; y: number; }
interface Point3D { x: number; y: number; z: number; }
/** Two sample functions */
let iTakePoint2D = (point: Point2D) => { /* do something */ }
let iTakePoint3D = (point: Point3D) => { /* do something */ }
iTakePoint3D = iTakePoint2D; // Okay : Reasonable
iTakePoint2D = iTakePoint3D; // Okay : WHAT
It's clear that iTakePoint2D's signature is incompatible with iTakePoint3D. Running iTakePoint2D({ x: 100, y: 200 }) will result in a runtime error, as the program cannot access the value of point.z.