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Ok Sports Fans, here's the law that is, in my experience, one of the least understood by the spectators. Let's examine just what the law says and then put some perspective to it. (Bear in mind this is General Play here; there are other laws relating to offside at specific phases of the game)
In general play a player is offside if the player is in front of a team mate who is carrying the ball, or in front of a team mate who last played the ball.
Offside means that a player is temporarily out of the game. Such players are liable to be penalised if they take part in the game.
So, just because they are in an offside position, doesn't mean they will be penalised. They are liable to be penalised if they take part in the game. This could mean by playing the ball, or by advancing towards an opponent, or just being in the way. Basically, if an opponent is affected by the player in an offside position (eg has to change direction to avoid the player, or can only pass the ball one way) then the offside player should be penalised. If, for example, the player in the offside position is the right winger standing near the touch line and play is way over the other side of the pitch, the offside dude is unlikely to be affecting play and should not be penalised.
Sometimes things just look wrong but, if it's general play and the player isn't affecting play, well, play on.
Advice to players: If you are in an offside position and in the process of retiring, or even standing still, trying really hard not to affect play, why put your hands up? We can see you anyway, even if your hands are down by your sides! Just get out of the way of play and we'll ignore you. It's harder to ignore you if you're waving your arms about...
Oh yeah, another thing. Consider the tackle: When it is only a tackle (ie before it becomes a ruck) the only offside that applies is within immediate proximity of that tackle. Everywhere else on the field is "General Play" and players are not necessarily able to be penalised for offside regardless of where they stand. Especially if the players' team is not in possession of the ball. Once it stops being a tackle and turns into a ruck, then the offside line runs the width of the field. If it stops being a tackle because the ball-carrier passed it to a team-mate, that's General Play - tackle him!
Hope this helps. More to come when the mood next strikes...