So I did some more research on this whole issue.
Once it has been established the the player is in an offsides position, the second condition is evaluated to decide if the player is involved in active play by:
- interfering with play
- interfering with an opponent
- gaining an advantage from that position (which is irrelevant here because if it was to bounce off the woodwork and/or the keeper and he went for the ball, it would be whistled as offsides.)
The International Football Association Board defines interfering with play as
playing or touching the ball when it has been passed or touched by a teammate.
The International Football Association Board defines interfering with an opponent as:
-
preventing an opponent from playing or being able to play the ball by obstructing the opponent’s line of vision or movements. (which apparently vision/sight does matter which I was wrong about)
-
or by making a gesture or movement which, in the opinion of the referee, deceives or distracts an opponent
So in the case of the Birmingham v
Liverpool free kick. The player was in an offsides position but was not called offsides (which was the right call).
- Yes he was standing in an offsides position by standing in front of the keeper (but he wasn't next to the keeper by any means, he was a good 10 or so yards away from him)
- No he did not interfere with play (he never went for the ball or touched it)
- No he was not distracting the keeper, he was just standing there (he wasn't waving his arms, jumping around, making faces, yelling at Reina and so forth)
- No he was not blocking Reina's view/vision of the ball as shown on video from different angles.
YouTube home video It's not the greatest video but you get the idea and can clearly see how far away the Birmingham player is from Reina.
In the end, no offsides was called and it was the right call. (Every football review/highlights show I've seen since have all stated that it was the right call.)
But you're right, a lot of it goes to the interpretation and judgment of the referee (and that obviously changes from game to game and from referee to referre). 
