There are
variations of this game, but I'll explain it the way that I'm used to playing it. First, you need one or two
tennis balls (depending on how many people are playing), not a
baseball or a
softball (unless you really want to get
hurt), and a
large wall to throw the ball against. It is best played when you have at least four people, 5-10 is
ideal.
The point of the game is to not get pegged, or hit with the ball. The way to do this is by not dropping the ball when you have it. The way you play is by throwing the ball against the wall, so it will bounce back in the direction of the players. When the ball comes back, either in mid-air, or bouncing, the players try to catch it. There are no turns, its all random, so anyone can catch it (except the person who just threw it). It doesn't matter if you catch it from mid-air, or if its bounced once, or even 50 times, just as long as you do catch it. And you continue doing this until someone drops the ball, which is where the fun part comes into play.
Now, say the ball is coming back from the wall, and you try to catch it, but instead of pulling it off like a pro, you drop it like a klutz. If this happens, you leave the ball where you dropped it, and you better run as fast as you can to touch the wall. While you're running, any of the other players can pick the ball up and nail you with it while you're on the run, or hit the wall with it before you touch the wall yourself. If you're either hit with the ball while you're running to try and touch the wall, or the ball hits the wall before you touch it, you have to take a peg shot. This means you stand against the wall, and whoever threw the ball to get you out gets the free shot at you. To make it fair, the pegger has to stand at least 20-30 feet away from the player against the wall, no cheating =). Now, if the pegger misses, lucky you, you go back and start playing as usual. If he/she hits you, ouch, just hope they have a weak throw =), then just resume normal play.
That's the main gist of it, like I said, its just one way to play. The most fun in my opinion is playing with 5-10 people with two balls at once, it makes the play more exciting. Its a very flexible game, so feel free to add your own little twist to make it more fun. Maybe make it so if the pegger misses the person who is out, the pegger will become the pegee, as an example. Anything you want, use your imagination.