Rules are subject to change!
Roster construction
Each team gets 50 players. At the start of the league, there's a 50-round draft. After that, the start of each season will have a 10-round draft where any players and prospects not on a roster are available. Out of the 50 players, you may have up to 10 prospects, but no more. You may have fewer prospects, even 0. There are no rules about how many pitchers or how many hitters you may have, you just have to meet the PA and BF limits. You cannot start a season with red on your Usage page, which sets minimums for PA and BF.
Rated Players
A pitcher must have 20 IP or 60 PA to be a rated player.
Prospects
A player is a prospect if they've never been a rated player. Once they are, they're never again a prospect, even if they don't get a rating in a future season. So if a pitcher gets 40 IP in 2012, and then gets Tommy John surgery and is out the entire 2013 season, he's still not a prospect, even if he spends the next couple of years in AAA.
Can we draft amateur players (the Mark Appel Rule)
Any player can be drafted, regardless of whether or not they're on an MLB team. If you want to use a prospect on a 14-year old Dominican or an undrafted college player, that is fine. I only ask that there's some online evidence of the player to disambiguate. No 'Jose Gonzalez' from Venezuela...show me a scouting link so we can trace the player if they get signed by a team. US College players are more obvious.
PA, GS, and BF limits
You may only play a hitter for as many PA as they had the previous season in real MLB. So Mike Trout had 639 PA. That would not be enough to bat him leadoff for a 162-game schedule, you'd need about 740 PA for that. You can manage that difference however you like, whether it be occasional off-days, big gaps at the start, middle, or end of the season, but when it comes down to it, you'll need some depth to fill in those PA (plate appearances)

You must have enough GS (Games Started) from actual starting pitchers for 162 games as well. You may not use relief pitchers to start any game.

You must have enough BF (Batters Faced) from pitchers to make it through the season. You may use starters in relief.

These limits are strictly enforced at gametime and the computer may make unusual moves once a player gets to 0 PA. If you run out of PA, GS, or BF through mis-management, you will be asked to sign an inseason free agent to play for you and cut a player. If you are eliminated from the playoffs, you may add up to five players without cutting any existing players. Any inseason free agent is a non-keeper and is automatically cut at the end of the season.

The game should eventually have really visible PA, GS, and BF tracking to assist you in managing the limits. There should be Green (use away), Yellow (nearing limited pace), Orange (slightly ahead of usage pace), and Red (way ahead of usage pace). When a star player is down to 20 PA and you have many games left, you may want to use them as a pinch-hitter the rest of the way rather than use them up entirely and have a poor backup to your 2nd best player.
Starter rest and fatigue
At least 3 days rest between starts will be enforced (4 days is normal for 5-man rotations). You can use pitching on short rest as a tool to line up your best starters against division rivals. There is no "getting rusty" penalty for lengthy rests > 5 days between starts. There is no fatigue in the simulator either. Relievers can pitch as many days in a row as you want. Starters can pitch on 3 days rest without losing effectiveness.
25-man roster
This is no 40-man roster, Rule 5 draft, or minor leagues to manage. You may use any 25 players any day. You may change that 25 players from day to day without worrying about options or whatever. Depth is the purpose here, not roster management. Rosters expand to 28 players at Day 152.

One exception is that for the playoffs, you have to define a 25-man roster at the start of each series and stick with it through the series.
Trades
When midseason trades occur that would take you over the 50-man limit, you have to choose a player to drop.

No trading draft picks in the start-of-league draft, but outside of that, every draft pick is tradable.
Positional Eligibility
If a player plays even a single game at a position, they're eligible at that position. You would be wise to consider their defensive ability at that position because defense matters to the simulator. They'll have a different defensive rating per position. With small sample sizes, I will err to the side of bad defense with the rating. There's probably a reason they didn't get more time at that position.
Injuries?
There are no injuries and no disabled list. Players are limited by PA/BF which are often lower becuase of MLB injuries. You may choose to keep a player out for a while, which mimics injuries, but the game will not create injuries.
League Structure/Playoffs
There are two conferences with two divisions each, with five teams per division. Six teams go to the playoffs.
The team with the best record gets a bye, and the wild-card and other division winner face off, the division winner gets home-field advantage. Playoff series are 7-game series.

Player usage limits during the playoffs still exist, but they're a little more relaxed. You can play about a full playoff series with a guy that had 500 PA. A player with 300 PA might only be able to play 4 of 7 games and pinch-hit a couple times. So it's about 75% as strict.
What matters for the simulator?
Defense, Lefty/Righty matchups, Pitcher fatigue, Player speed, the player's MLB HR rate regardless of park.
What doesn't matter for the simulator?
The dimension's of the player's MLB park as it relates to BABIP, doubles, triples. Games are played in a neutral park so if the ball is in play and not a home run, it's defense and average park dimensions that matter.

You've got questions about Dynasty?

How is Dynasty different from fantasy baseball keeper leagues? or how is it similar?
It's similar in that you root for your players to do well, but you don't have the same sit/start decision about real MLB games. You're rooting for their entire season to go well so you have a more useful player the following season. During the year, you're managing your team through simulations so the real MLB games don't impact your daily managing.

I don't get it, where does the skill come in?
In the day-to-day, set good lineups and good strategies to fit your team and you can exceed your talent and win more games.
At times, you will have to play worse players and how you mitigate that can mean the difference between a win and a loss.

In the year-to-year, you can recognize good talent by watching real MLB games or scouring sabermetrics stats. If you have an eye for players about to break out, you can build an impressive roster. If you always pick up prospects that never work out, you may find your roster gets old and starts to have issues producing.

So players will put up exactly the same stats as they did the previous year?
No. Games are simulated based off of ratings I generated using their previous year. During simulations, anything can happen, and the "luck stats" can be totally different. You may have a MLB player that hit .250 but had an unlucky .270 BABIP. In the simulations, he may have a lucky .340 BABIP and end up with much better stats. Also they're competing against slightly better competition. (Players from 30 MLB teams put onto 20 teams so the bad players get weeded out)

What about players that play in extreme hitter's parks or extreme pitcher's parks?
This is sort of a strange distinction, but BABIP will play as though it's a neutral park and it's defense-dependent. Since you're playing a different defense, the results will be different. Home run rates will hold, however. So if a guy hit a Coors-assisted 20% HR/FB rate, he'll still have that 20% HR/FB rate in the neutral park the games will simulate in.

In general, hitters will get a bump in value when they get signed by Colorado, so it pays to notice things like that.

Why 20 teams not 30?
You can only use hitters for as many PA (plate appearances) and pitchers for as many BF (batters faced) as they had the previous MLB season. With 30 teams, it would be too difficult to have enough players to get through a full schedule.

What players do I start with?
There will be a draft to start the league with a randomly generated snake draft order. If you join a league in progress, you just get that team as-is, which can be a fun puzzle to solve. We almost always need GMs to do this!

How much time will this take?
Games are run at a real-life pace, meaning once a day from April to October. You can set a lineup and rotation and not check your team for a few weeks. Putting time into scouting before the draft and trying to work trades with other GMs could reap benefits. You do have to manage usage limits and will need to make some lineup and rotation changes periodically because of that.

How good is this simulator?
I've worked hard on it, and it's really good in terms of BB%/K%/BABIP/Defense. Baserunning and strategies are probably the roughest areas.

Is this free?
As of now, yes. I appreciate early adopters. I plan to charge for leagues eventually.

You've got questions about Franchise Mode?

How does scouting work?
The draft has some public information like you would see on public rankings sites, but like real life, that info isn't gospel. You can assign area scouts and special scouts to scout amateurs, minor leaguers, and major leaguers to get more opinions. That information isn't perfect either, and won't necessarily match the information that scouts from other teams gives. Your job as GM is to sort through that and make a decision for your team.

How does the draft and international players work?
You draft only 4 rounds but 20 rounds are generated using adjusted rankings and your scouting. International signings are more random, generated based on July 2 strategies that that you set each year.

How does player development work?
Injuries, body type, and good/bad performance contribute to realistic player development curves over time. Some ratings peak early, some later. It's a little random, so you could see down years which don't necessarily mean a decline is happening. Prospects are not guaranteed to reach their potential scouted ratings, they often don't. This can be frustrating to GMs building a franchise, but I felt that was realistic. Your coaches and scouts will advise on prospect handling. Your job as GM is to sort through the stats and scouting and make decisions for your team.

Do I lose players to Free Agency?
Yes, sometimes. It can be frustrating to GMs building a franchise, but I felt that was most realistic. You have to interact with the AI Agents. There may be league options in the future.

How do finances work? Are there small-market teams?
I chose not to have a great market disparity between teams, so this is a not-real segment of the game. Market differences are constrained to only a 20% gap. Beyond that, franchise performance can affect the budget an additional 30%. The design is that you are the GM working with an owner that provides you a budget. As in real life, owners can make exceptions to allow the GM to make certain moves.

Other stuff?

How do you interact with the other GMs?
Through email or chat programs on social media.

What else are you working on?
So many things!

Why Google Accounts?
Honestly, it was easy for me to set up. I will probably do OpenID down the road, but my focus needs to be on the game simulation right now.