As Carl Childress says in Inside The Books, “unreported substitutes are not necessarily illegal substitutes”. As the rule reads:
Should there be no announcement of substitutions, a substitute has entered the game when the ball is live and:
a. a runner takes the place of a runner he has replaced,
b. a pitcher takes his place on the pitcher’s plate,
c. a fielder reaches the position usually occupied by the fielder he has replaced, or
d. a batter takes his place in the batter’s box.
No penalty. An illegal substitution, on the other hand, is a whole different thing:
For discovery of an illegal player (2-36-3) on offense by an umpire or either team, that player shall be called out and restricted to the bench/dugout for the duration of the game. An illegal player discovered on defense shall be restricted to the bench/dugout for the duration of the game. If a restricted player re-enters the game on offense, he shall be called out immediately and ejected upon discovery by an umpire or either team. If he is a defensive player, he shall be ejected upon discovery by an umpire or either team.
The penalty for illegal substitution shall supersede the penalty for batting out of order.
If the player should score a run, advance or cause a play to be made that allows another runner(s) to advance, discovery must be made by an umpire or either team before the first pitch to the next batter of either team. This would invalidate the action of the illegal offensive player. Any out(s) made on the play stands and all other runners return to the base(s) occupied at the time of the pitch.
In a game-ending situation, discovery must be made before all infielders leave the diamond (i.e., all infielders cross the foul lines).
And, to close the circle,
ART. 3 . . . An illegal substitute is:
a. a player who enters or re-enters the game without eligibility to do so, or
b. a player who re-enters the game in the wrong position in the batting order, or
c. a player who enters the game on defense while the player for whom he is batting is also on defense, or
d. when the player for whom the DH is batting enters the game as a batter or runner in a different position in the batting order, or
e. a player who violates the courtesy runner rule.