Zenon said:
"and X covers her face with her arms" (near quote).
This to me implied that even with nowhere to go, the act of covering your vunerable and exposed parts with something, even other body parts of yours which were less vunerable, armored, etc. gave you the ability to make your save. It had nothing to do with getting out of an area, having something to hide under, etc. It would explain why, if you were pinned, that you might not get a save, or why a restrictive 2 1/2' shaft might not give you a save.
Now, that makes a whole lot o' sense. Up until this point, the DMG simply stated that if you didn't have room to maneuver, you didn't get a reflex save. If the mere action of covering your vulnerable spots (such as your face) is enough, then that changes everything. Suddenly, it's no longer a matter of having enough room to maneuver, but simply being able to move enough to cover your face is all you need.
Ki Ryn brought this up a bit earlier, but I couldn't find anything in the DMG to back it up. But page 70 obviously backs up both of you. So, if you're in a 5-foot corridor, whether you are alone or sharing it with others, whether you are grappling or not, you get a save, simply because you have enough room to cover your face. I can live with that (except for the grappling part, which I’ll explain later), it's just that this whole time, covering your face wasn't an option, as you had to have room to move.
Caliban, I'd still like to respond to you though. Here's my thing. We know that if you don’t have room to move, you don’t get a reflex save. We also now know that if you have enough room to move to cover your face, you get a reflex save. However, this last is something that I didn’t know before, something that nobody knew before, and if anybody did know, they failed to mention it. This changes everything, but I’ll go ahead and explain my original argument, so keep in mind this is without knowledge that covering your face is all you need to do.
You pointed out that 4 people can easily fit within a 5-foot square. I concede this. You also pointed out that if 2 people are in the same 5-foot square, they have plenty of room to move, as illustrated here in this 5-foot square (A and B are the characters and X is empty space):
A X
X B
Now, if a fireball comes at these two people, A has enough room to move right or down, and B has enough room to move left or up, thus, both get their reflex saves. I have no problem conceding this point, but only because I now know that you merely need to be able to cover your face. Had I, or anyone else, known that before, this wouldn’t have been such a big issue.
But, what if they’re grappling? This was my biggest argument, the one thing I couldn’t get past in my mind. A and B got their saves because they both moved and there was nothing preventing them from doing so. If you’re grappling, you don’t automatically move. A is grappling B, and B is grappling A, so A is preventing B from moving, and B is preventing A from moving. Now, a fireball is shot at them. Which way do they move? First, you have to remember that they are grappling. When you’re grappling, you are trying to force your opponent to the ground or simply keep them busy. What if you don’t want your opponent to effectively protect himself from that fireball, knowing that you can probably soak up the damage but he probably can’t? What if you want to place him between yourself and the fireball? Do you have no choice in the matter? Are you forced to automatically make a reflex save? That doesn’t make sense given the mechanics of a grapple.
To make a reflex save, you must A) Be able to cover your face, and B) Have enough room to maneuver. If you are grappling, where and when you move is not automatic, and being able to cover your face is not automatic. You can’t automatically move in a grapple unless your opponent is also willing to move in the same direction as you. The simple mechanics of a grapple demand this, as everything is based on checks. However, you are not denied your reflex throw while grappling, even though you A) Can’t move unless your opponent is willing and B) Can’t effectively cover your weak spots. So, in my opinion, unless you and your opponent break the grapple or both move together, you can’t get a save. The grapple itself prevents this.
There is no clear cut answer to this (if there is, I'd like to know). There is no rule that solidly points one way or the other. The only thing to be found are two references requiring you to A) Be able to move or B) Be able to cover your face, and a grapple, logically, prevents both of these.