Gee, convoluted language in a rule, who'd of thunk it?
I think what they are saying is if you have a whistle, then a glance with running time. That the interval between the whistle and the glance should be considered the second of lag time.
Under those conditions, lag time is "interpreted" and time is corrected to definite knowledge.
If whistle and definite knowledge have no interval, i.e. the official can see the clock as the whistle is blown, there is no interpretation needed. A second or less runs off, it is considered lag time, without correction.