from "Film Lexicon" by Peter Donaldson

THE CONTINUITY SYSTEM: A highly standardized system of editing, now virtually universal in commercial film and television but originally associated with Hollywood cinema, that matches spatial and temporal relations from shot to shot in order to maintain continuous and clear narrative action. Generally speaking, the continuity system aims to present a scene so that the editing is "invisible" (not consciously noticed by the viewer) and the viewer is never distracted by awkward jumps between shots or by any confusion about the spatial lay-out of the scene. Classical editing achieves a "smooth" and "seamless" style of NARRATION, both because of its conventionality (it is "invisible" in part because we are so used to it) and because it employs a number of powerful techniques designed to maximize a sense of spatial and temporal continuity.
A key element of the continuity system is the 180 DEGREE RULE, which states that the camera must stay on only one side of the actions and objects in a scene. An invisible line, known as the 180 DEGREE LINE or AXIS OF ACTION, runs through the space of the scene. The camera can shoot from any position within one side of that line, but it may never cross it. This convention ensures that the shot will have consistent spatial relations and screen directions. In other words, characters and objects never "flip flop:" if they are on the right side of the screen, they will remain on the right from shot to shot; those on the left will always be on the left. For example, an actor walking from the left side of the screen to the right will not suddenly, in the next shot, appear to be walking in the opposite direction -- a reversal that would strike the viewer, if only fleetingly, as confusing or jarring. With the 180 DEGREE RULE, the viewer rarely experiences even a momentary sense of spatial disorientation.
In theory, the camera may move anywhere on one side of the axis of action. In practise, however, the continuity system tends to follows a conventional pattern of camera placement and editing. For example, in a classic instance of two people facing each other in a conversation, a sequence would begin with an ESTABLISHING SHOT, a shot presenting a more or less complete view of the setting, showing the spatial relations among the key figures. The establishing shot gives the spectator an overview so that subsequent shots dissecting the space at a closer range are much less likely to be spatially ambiguous or disorienting. Periodically, the director will provide a RE-ESTABLISHING SHOT, to refresh the viewer's sense of the scene's overall geography.
After the establishing shot, the camera typically moves incrementally closer to the action. One might see a LONG SHOT of the characters in conversation, followed by a MEDIUM SHOT. Any shot focusing on two people is referred to as a TWO SHOT.
As the scene progresses to moments of emotional or dramatic intensity, the camera typically presents closer shots of the individual characters -- MEDIUM CLOSE-UPS and CLOSE-UPS. These shots usually alternate between the two speakers, with the camera placed at more or less opposite ends of the axis of action between them. This pattern of alternating shots is called the SHOT/REVERSE SHOT structure.
There are three common variations of the SHOT/REVERSE SHOT:
1) In a simple SHOT/REVERSE SHOT, the camera simply alternates between shots that show one person at a time (usually the person talking).
2) An OVER-THE-SHOULDER TWO SHOT is also commonly used in conversation sequences. The camera is placed behind the shoulder of one of the people in the conversation. We see both characters -- one more or less frontally and the other from behind (usually we see just part of the head and torso).

3) A somewhat less common approach to the SHOT/REVERSE SHOT is to use a POINT-OF-VIEW SHOT or POV. The camera is placed where a character's eyes would be (either exactly or approximately). In a conversation sequence, a POV would generally show a more frontal, head-on perspective of the other character. (The POV, of course, is not found only in conversation sequences. More commonly, a POV shot is cut in before and/or after a shot of the character looking. Hitchcock's Rear Window, for example, is comprised largely of shots showing the Jimmy Stewart character's POV as he spies on the apartments across the way, followed by REACTION SHOTS showing him respond to what he sees).
A key aim of the CONTINUITY SYSTEM is to ensure that no edit calls attention to itself or strikes the viewer as spatially confusing, inconsistent or awkward. The 180 DEGREE RULE and the conventionality of the editing formula described above do a great deal to achieve this end. Three other standard editing techniques in classical editing are also important:
First, Hollywood editing typically embeds cuts in the middle of an action.-- a technique known as a MATCH ON ACTION. This technique helps "hide" the cut, since the viewer is paying attention to the action rather than the edit.
Second, Hollywood editing typically adheres to the 30 DEGREE RULE, which holds that the camera must move at least 30 degrees between shots. In other words, it is taboo to show one shot and then cut to another shot that is almost the same as the first. If the angle of framing of two adjacent shots is too similiar, it creates the appearance that an object is jumping in a stacatto burst from one position to another. Although a number of modernist directors take advantage of this effect, called the JUMP CUT, to draw attention to editing, Hollywood editing avoids it for precisely the same reason.
Finally, Hollywood editing employs the EYELINE MATCH to preserve spatial continuity and make the cut less noticeable. In an eyeline match, shot A shows a character looking offscreen and shot B shows what the character is looking at. The character's gaze is directed precisely so that it corresponds to the spatial lay-out established in earlier shots. This matching keeps the spatial relations among characters and objects consistent from one shot to the next. At the same time, the eyeline match makes the cut slightly smoother, since the viewer expects the cut and is eager to see what the next shot will show.