Flirting can be hard to distinguish from friendliness. What seems like overt flirting to a 6th grader is normal conversation to more mature people. There is no way to disambiguate permanently, aside from complete openness of feelings, which kind of misses the point of flirting: to have fun.

To add to what rescdsk said above, people interpret the same flirtatious activities in different ways. I've known people who think that hugging has some sexual overtone to it. I've known people who have thought that a guy placing a hand on a girl's shoulder or something like this is somehow sexual in nature.

On the other end of the spectrum, I've known people who can do basically anything short of intercourse and not interpret it as sexual. For example, there are several people I know of (as opposed to know) at my university who are close friends and seem to have a tendency to make out just for the fun of it.

On a related note, just because something is romantic doesn't mean that it's sexual.

One of the problems with human psychology is always trying to draw a line between what is romantic, what is sexual, and what is platonically friendly, and then figuring out how it all fits in. If a friendship is between members of the opposite sex, it seems that even if it's platonic it needs some kind of romantic component or it will eventually burn out. Women usually don't like being treated like "one of the guys", and guys don't like being treated like a platonic girlfriend.

Then again, one has to define romantic. What a mess.

Flirting, like a butterfly, is rather hard to put ones hand on, and once one has, it suddenly seems less beautiful (and sometimes leaves powdery marks).
But seriously, flirting is very hard to define not only because "some people find anything short of intercourse non-sexual", but because if flirting is done properly, the accomplices define the rules as they go along. Much of flirting is indeed reserved for wooing situations, and this often goes along pretty well defined rules, because people like to know where they stand while negotiating a contract. On the other hand, some of the best flirting is done as a means of friendly communication, as if saying "I find you attractive, and something might have worked out if the situation weren't as it is". This type of flirting is fun, and as long as both sides know what it's about I have no trouble flirting like this with gay or married people, whom I'd never sleep with.

In addition to the normal hazards posed by flirting, one must also take into account local laws and customs. For example, the January 12, 2001 issue of the Wall Street Journal reports that in an effort to curb the spread of HIV, the Tanzanian village of Nyakaboja has made flirting a crime punishable by the payment of a chicken. Don't try to lie your way out of it, either - denying your obviously licentious intentions will earn you a thwack on the head with a club from the local militia.

Flirting, in its purest form involves two partners and a desired, spontaneous, mutual understanding between them. This understanding can be based on a physical, emotional, social, or intellectual level. Flirting, in its more refined levels, takes form through innuendo: a double entendre, a suggestive remark, a creative play on words, a contextual reference to a previously-mentioned experience. Less creative forms of flirting generally occur on the physical level: a woman's flip of her hair, a man who stretches during conversation, flexing all visible muscles, or a friendly form of physical contact; a soft touch on the arm, a playful slap on the shoulder. The purpose of flirting is as myriad as those who engage in the activity. Generally, the desired result is an assuagement or inflation of ego; however, many who flirt simply enjoy the act in and of itself and seem immune to non-receptive responses. The "flirt" is not to be confused with the "tease".

Flirting is an art form, a dance, a bit of play, taken far too seriously by some.

It is the curse of our Puritan routes that holding hands is only for lovers, that hugs are only for the intimate and that a touch on the shoulder is an innuendo. It's a game. A game for new friends, complete strangers, old lovers, everyone.

Flirting is a form of the verb flirt, which the OED tells us was first used in the "to flirt with" sense in 1777. Flirting is, "To play at courtship; to practice coquetry; to make love without serious intentions." Dickens brought the term into more common use by using it to hint at playing. Everything from witty word play to Roman hands and Russian fingers has been known to fall under the word's large umbrella. One can even flirt with Death himself, thanks to the English language.

In such a litigation-obsessed society, what is play to one is harassment to another. That hand on the shoulder is a violation. You have to pick your playmates carefully and feel the rules out as you go. The fun is in finding the meaning and the apprehension comes from wondering if you're both working under the same pretense. Was the kiss on the forehead a greeting or a come-on? Are those looks just out of appreciation for a fine figure or an undressing with the eyes? Was that compliment the product of too much drink or mere overconfidence? The joys of ambiguity are certainly not lacking in this theater of human interaction.

The game isn't just for single players, though it's all too often assumed the attached are uninterested. It reminds you of what could have been or what could be. Even the most innocent touches can ignite the flames of a dying passion. Courteous gestures bring back memories. Sweet words melt ice. Egos are bolstered.

At the end of the night, what you call it isn't what's important. The warm glow you may or may not feel inside is.

Thanks to the OED for some historical perspective.