Rule 5. Offensive Substitutions
Article 8.PENALTIES FOR ILLEGAL SUBSTITUTION OR WITHDRAWAL
e. For an offensive substitute who moves onto the field inside the field numerals and leaves without participating in one play: Unsportsmanlike Conduct. See
5-2-5 Note.
You are thinking of 5.2.5 which the note section is referenced, but it is actually a totally seperate rule, not part of the requirement for the penalty.
ARTICLE 5. OFFENSIVE SUBSTITUTIONS
The following are applicable to any offensive substitute who is entering the game:
- He must move onto the field of play or the end zone as far as the inside of the field numerals prior to the snap to be a legal substitution. If he does not, and is on the field of play or end zone at the time of a legal snap, he is an illegal substitute.
- If he approaches the huddle and communicates with a teammate, he is required to participate in at least one play before being withdrawn. Violations of this rule may be penalized for unsportsmanlike conduct.
Note: The intent of the rule is to prevent teams from using simulated substitutions to confuse an opponent, while still permitting a player (or players) to enter and leave without participating in a play in certain situations, such as a change in a coaching decision on fourth down, even though he has approached the huddle and communicated with a teammate. Similarly, if a player who participated in the previous play leaves the playing field by mistake, and returns to the playing field prior to the snap, he is not required to reach the inside of the field numerals, provided that the defense has the opportunity to match up with him. However, a substitute (i.e., someone who did not participate in the previous play) is required to reach the inside of the field numerals.
The Key point is this part of the note: The intent of the rule is to prevent teams from using simulated substitutions to confuse an opponent, while still permitting a player (or players) to enter and leave without participating in a play in certain situations, such as a change in a coaching decision on fourth down, even though he has approached the huddle and communicated with a teammate.
The ref made the determination somehow that this was a simulated substitution or ignored that the player should be allow to leave based on a coaching decision change without penalty even if they engage in the huddle.