To help understand how sugar interactions with proteins stabilise biomolecular structures, we compare the three main hypotheses for the phenomenon with the results of long molecular dynamics simulations on lysozyme in aqueous trehalose solution (0.75 M). We show that the water replacement and water entrapment hypotheses need not be mutually exclusive, because the trehalose molecules assemble in distinctive clusters on the surface of the protein. The flexibility of the protein backbone is reduced under the sugar patches supporting earlier findings that link reduced flexibility of the protein with its higher stability. The results explain the apparent contradiction between different experimental and theoretical results for trehalose effects on proteins.