Why does variable expansion within an alias work "as intended" in only one of these cases?

Question

This question was inspired in part by this one.

alias foo='ls -1 $1'
foo /etc

displays the contents of /etc, one item per line.

ls -1 /etc | tail

displays the last ten items in /etc.

But

alias foo='ls -1 $1 | tail'
foo /etc

displays: tail: error reading `/etc': Is a directory

Answer 1

I have found variable expansion in aliases to be flaky, and not recommended:
http://www.gnu.org/software/bash/manual/bashref.html#Aliases

Use a function instead: function foo() { ls -1 $1; }

Answer 2

Aliases done this way will only expand from the set of parameters:

$ alias foo='ls -1 $1 | tail'
$ foo .
# Type Esc-C-e: this expands aliases/globs/environment variables...
# ... And the result of the expansion is:
$ ls -1  | tail .
# $1 has disappeared
$ set bar  # set $1...
$ foo . # again, Esc-C-e
$ ls -1 bar | tail .