Magnifying-Glass Damage, formerly known as Hoop Damage, is the damage that a fighter 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 fighter 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. This hoop is accompanied by an arrow that signals the player to get back on-screen. Magnifying-Glass Damage is damage applied while the fighter is displayed this way, at a rate of 1% per second, but stops occurring when the fighter has accumulated 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 edges of the glass flash yellow when the player is dangerously close to the blast line.
Magnifying-Glass 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 the effect, they instead 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 damage as a result, as the time spent isn't enough for them to sustain damage. Joker's Rebellion Gauge does not fill when taking Magnifying-Glass Damage.
The damage sustained by Magnifying-Glass Damage is often inconsequential, having little impact on most games. Its main purpose is to serve as a minor deterrent to camping close to the blast zone with the aim of throwing an opponent for an early KO. It does have situational uses for a player, though, such as Terry using the damage to get access to Super Special Moves if he's extremely close to the threshold without having to get hit, but this is niche and extremely punishable.