There we go. Now that the description is handy for refrence, my take on how it works.
Say you're in a 20ft x 20ft room, 10ft high. No features or windows. One entry way, a door on one wall that opens into the room. The only furnishing is a single chair in the exact center of the room. Light is coming from overhead by way of a glass ball enchanted with permanant light spell. You are 10ft from both the door, and the chair, standing between the two, out in the open.
Someone opens the door, to interact with you in some way. You don't want to interact with them, so you decide to Hide In Plain Sight. Your options would be: use the shadows under the chair, use the shadows behind the door that was just opened into the room, use the shadow of the man in the doorway. You are within 10 feet of all of these. You take a standard action to use HiPS (it being all supernatural and whatnot) and make a Hide check, opposed by the other guy's Spot check. If you succeed, you disappear from sight. Now here's the rub..
Say you hide under the chair. If the guy overturns the chair... you appear. Your hiding spot was ruined. You can take another standard action on your turn to pick another hiding spot.
Say you were hiding in the shadows behind the opened door. If the guy steps into the room and closes the door... you appear. The shadows went away when the door was closed. Again, you can hide again, but until your turn comes up, you're visible.
Say you were hiding in the guy's shadow. If he takes a 5ft step backward out of the room... you appear. Your hiding spot just went outside of your range. Likewise, if you hide in the door shadow, or the chair shadow, and you move more than 10ft away from them, you appear, because you and your 'anchor' became more than 10ft seperate