The 1/3 rule dates back to the recruiting accusations in girls basketball charged against teams like Madison, Oakton, West Springfield, and others where high school coaches were using their AAU coaching to build relationships with players during the offseason and getting them to pupil place into their schools by taking a class such as sign language. Kara Lawson, basketball player who led West Springfield (after pupil placing away from West Potomac) to two state titles before heading to Tennessee and WNBA, was poster child that helped implement this rule. It now applies to all NR sports.
So, coaches can now coach as much as they want in the offseason, but only 1/3 of the roster can be from their school.