As I've already explained to Paxie, the rule you guys mentioned applies mainly when a player is surrounded by multiple people who have their guns drawn and aimed at them. Two examples:
1. Player A is fleeing from the cops in a vehicle. During the chase the vehicle gets disabled and the player steps out of their car, four police officers surround him and aim their guns at him.
2. Player A is a gang member, minding their owns business in the middle of Rumbley Block. Suddenly three members of another gang show up and aim their guns at him, trying to force him into a trunk by holding him at gunpoint.
In both situations Player A would not be allowed to pull out their gun (if they have one at the time), because even if they would somehow manage to shoot one of the cops/etc - they would still die. That's what the rule is about - situations when you have no chance to win the gunfight yet you still decide to start one.
Another thing that started happening commonly these days was criminals roleplaying "reaching for something" while surrounded by cops, just to trigger their procedures and get themselves killed to avoid jailtime. Those players often didn't even have a weapon on them, making the whole death completely non-RP. That's also what the rule forbids.
I hope I managed to clear it up for you!