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You've already cited the rule.
The rest is umpire judgement.
It matters in Co Ed play due to the fact that the rules define a specific number of infielders and outfielders of each gender. If, in the judgement of the umpire, the shortstop is playing too deep then the numbers are skewed and an adjustment must be made.
Again, it's all up to the judgement of the umpire on each players position. The word "around" in the text of the rule is intentionally a very broad term.
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