A control panel is the part of an arcade game that houses the joysticks, pushbuttons, and other controls.
Early control panels were often very small (about 18" wide and 5" tall), and usually featured only a single joystick (some games such as Space Invaders and Asteroids didn't have a joystick at all). Controls panels stayed rather small (with a few exceptions, such as the 4 player version of Gauntlet), until the early 1990s when a single game changed everything. That game was Street Fighter II. SF2 had 2 sticks with 6 buttons each. Many older games with small panels were converted into SF2 machines, but those old smaller panels were just a little too cramped for that many buttons. The crop of games after SF2 started coming with big control panels that extended out a bit from the machine (some modern 2 player panels are as large as the old 4 player Gauntlet ones).
When building your own arcade machine (be it a MAME cabinet or a JAMMA cabinet), the control panel is probably the most important part of the whole machine. It is imperative that you get a panel large enough for all the controls that you wish to jam onto it (I have seen people try and cram a Streetfighter layout and a trackball into an old Ms. Pac-Man panel, and it was not pretty). Your controls should be nicely spaced out. I would suggest taking measurements off of dedicated cabinets to find the proper spacing (never take measurements off of a converted game, as those controls were more than likely installed by some half stoned 19 year old employee at Chuck E. Cheese sometime in 1992). My favorite layout (which works well for almost any game you can throw at it), is a modern oversized panel with a trackball installed dead center, 8-Way joysticks with 7 buttons each to the left and right of the trackball, a single 4-Way joystick mounted high and slightly left of center, with a spinner mounted high and slightly right of center.
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4-Way Spinner
Stick
Buttons Buttons
8-Way 1 2 3 4 Track 8-Way 1 2 3 4
Stick 4 5 6 Ball Stick 4 5 6
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Look carefully at the buttons, notice how there are 2 different ones labeled as #4, that is because many 4 button games (Neo-Geo especially) have 4 buttons in a single row. While most games with 6 buttons have 2 rows of 3. So you simply make button 4 in 2 different places (making both types of game feel correct). The 4-Way joystick can be wired into the same place as the first 8-Way one (as you will never need to use them both at the same time). This, however, is just my design. Something else might suit your needs better (for a smaller panel I suggest just the 2 8-Way joysticks, and the 7 buttons per player).
Ebay is an excellent source for used control panels at decent prices (building one from scratch can be very expensive). But panels from classic games will go at a premium.