Hoop damage, also known as Magnifying-Glass Damage, is the damage that a character receives when they are out of the camera's boundaries but not past the blast line. It is present in all games except the original Super Smash Bros..
When a character is off-screen but not past the blast line, they are still shown inside a small hoop known as the Magnifying-Glass at the edge of the camera boundary. Hoop damage is damage applied while the character is displayed this way. Hoop damage is applied at a rate of 1% per second, but stops occurring when the character has accrued 150% damage. In Ultimate, the size of the magnifying glass is determined by how close a player is to a blast line: the closer to a blast line, the smaller the glass gets. The hoop flashes yellow when the player is dangerously close to the blast line.
Hoop damage does not occur in Training Mode nor in the All-Star Rest Area in Melee and Brawl. In the Subspace Emissary, if Player 2 is in a situation that would usually trigger hoop damage, instead they usually Space Jump. Charizard, Meta Knight, Kirby, and to a lesser extent, King K. Rool, all have up throws that send them above the upper blast line with the accompanying Magnifying Glass, but they do not take hoop damage as a result.