Note #1: I use the masculine to describe the participants because I have yet to meet a woman who's played this game.
Note #2: The use of the word "queer" is not homophobic in this game. It's used as catchy name to describe the game. The "queer" in this sense is just the kid who's it. Because it's completely voluntary to be the "queer", and being the "queer" requires a certain amount of bravery, it is not used in the derogatory in this this particular usage.
Play starts when object is thrown into the air. Players may either snatch object out of the air or wait until it lands. If the object lands, the person closest to it MUST pick it up. (Group will use judgement, or someone who wants it can just pick it up.) Once a player is in posession of the object, they try not to get tackled. Once tackled, the object is thrown into the air (or at a particular person) and the game starts over. Play usually ends when everyone is tired or when someone gets hurt.
Note: While often thought of as a "boy's game" I personally have seen girls playing Smear the Queer, though I don't recall ever seeing a co-ed game; which really just hightens the feel of homoerotisism.