IANAL, but here's my short answer:
Think of it this way.
1.) "Open Game Content" describes a MINIMUM. The MINIMUM that you MUST open under the Open Game License is the "game mechanic... methods, procedures, process, and routines" - in other words, anything having to do with statistical stuff, die-rolling, or otherwise related to mathematics and/or probability. You are allowed to open MORE, but not LESS. One more thing to consider - if you publish with the d20 logo (and hence bind yourself to the terms of the d20STL), you gain an additional provision as relates to the MINIMUM of OGC: at least 5% of the work must be OGC, which may require you to open more than "just the mechanics."
2.) "Product Identity" describes a MAXIMUM. The MAXMIUM that you can call "Product Identity" is basically stuff you could write as fiction/prose that does not have to do with statistical stuff, die-rolling, or otherwise rlated to mathematics and/or probability. You are allowed to "close" LESS, but not MORE.
3.) The OGL does NOT trump copyright. When publishing under the OGL, you have three ways to "designate" stuff:
a.) OGC - The bare minimum MUST be OGC, though you can designate more. This is, in effect, is "giving permission for others to use your copyrighted writing" - on condition that they do so under the terms of the OGL.
b.) PI - There is a maximum you can designate as PI, though you can designate less. If something that you have specifically designated PI is in a section that is designated as OGC, the PI designation "trumps" the OGC designation. This lets you create Open Game Content that has your Product Identity "mixed in" without having to format the text, et al in ugly and/or obtuse ways and you still keep others from using your Product Identity. This, in effect, is denying permission for others to use those items that you called out as Product Idenity, even though they fall in a section that would otherwise be OGC. In this case, normal copyright law applies (they must get written permission from you to re-use the work).
c.) "None of the Above" - There may be sections of a work that you do not designate as OGC or PI. In this case, normal copyright law applies (the must get written permission from you to re-use the work). This is of course, the "least interesting case" but does bear mentioning. If something is neither OGC nor PI, assume it is "None of the Above."
AFAIK, the normal provisions of copyright law still apply, even to OGC material (e.g., you can make short quotations for purposes of review or scholarly argument without need of using the OGL), but IANAL.
Really, the key things to remember are:
1.) OGC has a MINIMUM
2.) PI has a MAXIMUM
3.) PI lets you "trump" an OGC designation.
4.) If you choose to use the d20 logo, your material must be a MINIMUM of 5% OGC.
Again, IANAL.
--The Sigil
Long Answer:
HellHound said:
"Open Game Content" means the game mechanic and includes the methods, procedures, processes and routines to the extent such content does not embody the Product Identity and is an enhancement over the prior art and any additional content clearly identified as Open Game Content by the Contributor, and means any work covered by this License, including translations and derivative works under copyright law, but specifically excludes Product Identity.
I think the easiest thing to do is look at the terms of the OGL (emphases above mine). What you see bolded there is the MINIMUM that you MUST open under the OGL, as well as the phrase, "any additional content..." (IOW, anything else you want to add, you may add).
Let's start by looking at the question of:
What is Product Identity?
<It is> product and product line names,
In other words, the title of your products and/or your product lines. For example, "The Book of Eldritch Might" is a product name and is therefore Product Identity. The "Legends & Lairs" series is the name of a product line and is therefore Product Identity.
logos and identifying marks including trade dress;
In other words, graphic elements such as company logos and related visual things such as sets of graphics, font/color combinations, and so on that make the product identifiable as "yours"
artifacts; creatures; characters; stories, storylines, plots, thematic elements, dialogue, incidents, language, artwork, symbols, designs, depictions, likenesses, formats, poses, concepts, themes and graphic, photographic and other visual or audio representations;
In other words, these specific types of "things" are PI as they are (in theory) unique to your published material. Note that these are basically "classical fiction" free of game mechanics (storylines, for instance, would have a hard time being game mechanics).
names and descriptions of characters, spells, enchantments, personalities, teams, personas, likenesses and special abilities; places, locations, environments, creatures, equipment, magical or supernatural abilities or effects, logos, symbols, or graphic designs;
Note that it says only "names and descriptions of..." these things. That means that the fiction/prose portions of such things are considered product identity, but the Game Mechanics/Statistics are not. For example, Bob the Fighter's name and backstory are PI, but "Str: 14, Dex: 15" are not.
and any other trademark or registered trademark clearly identified as Product identity by the owner of the Product Identity, and which specifically excludes the Open Game Content;
In other words, your trademarks and registered trademarks. It should be abundantly clear what those are - things followed by "TM" or "R" and made such through appropriate legal channels. These are perhaps the simplest things to recognize. The last phrase points out that if OGC is part of your trademark (for example, "Bob's Fireball Wand" might be your trademark, but "fireball" and "wand" or "fireball wand" can be used as others as they are pre-existing OGC) that the OGC portions cannot be "cut out" from use just because you trademark them (otherwise people might try to trademark "Fireballlightningboltmagicmissileburninghands" and remove those spells from OGC).
This is basically a long, roundabout way of saying that anything that is (a) graphics/artwork, (b) company or product name or trade dress, and/or (c) stuff that could be classified as "fiction devoid of game statistics" is, by default, considered Product Identity. It is important to note that the definition of Product Identity can be considered as a "Maximum" - there is no provision for making more stuff PI than is specifically mentioned above. This is the MAXIMUM that you can designate as Product Identity.
Now, it behooves us to take a look at the next question:
What is Open Game Content?
"Open Game Content" means the game mechanic and includes the methods, procedures, processes and routines
In other words, anything that refers to die rolls, game statistics, tables to compare die rolls against, and so forth. In short, the "rules/statistics" portion of the writing (distinct from "fiction/prose").
to the extent such content does not embody the Product Identity and is an enhancement over the prior art
To my untrained eye, this looks like a possible "exception" to the game mechanics are by default OGC rule... but it requires two conditions to make it so. The Game Mechanics must (a) be an enhancement over the prior art - meaning that your stuff must be better than the original mechanics and (b) must embody the Product Identity. I'm not sure exactly how you can get Game Mechanics to "embody" your Product Identity, to be honest, though I'm sure someone can think of something. The best thing I can think of would be the "d20 logo" - obviously, the term d20 is in wide use as a shorthand for "twenty-sided die" but the stylized "d20" embodies the essence of the d20 system - meaning that particular font/color combination CAN be called Product Identity. Maybe not the best example, but I can't think of another applicable one.
and any additional content clearly identified as Open Game Content by the Contributor,
In other words, while the default is "game mechanics only," it is quite possible to add more Open Game Content. In other words, "game mechanics" are the REQUIRED MINIMUM but nothing stops you from benig a nice guy and opening up more than you are required to.
and means any work covered by this License, including translations and derivative works under copyright law,
In other words, if you translate or create derivative works from someone else's Open Game Content, the translation or derivative material is automatically Open Game Content. Rather than trying to define "derivative works" it simply references the definition of "derivative works" as held under copyright law (to avoid re-inventing the wheel).
but specifically excludes Product Identity.
This is mostly done for ease of use, IMO. This exclusion allows you to designate "Bob" as Product Identity and "Chapter 3 except PI" as "Open Game Content" and still have Chapter 3 look nice by not having to boldface the word "Bob" every time it appears (for example). In other words, it lets you create Open Game Content that has your Product Identity "mixed in" without having to format the text, et al in ugly and/or obtuse ways and you still keep others from using your Product Identity.