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3.16.6.2 Derivation Valid (Restriction, Simple) appeals several times to the notion of "valid restriction", e.g. clause 1.3.2 "... the DF's {value} is a valid restriction of BF's {value} as defined in [XML Schema: Datatypes]." Datatypes does not define the notion of one value being a valid restriction of another value in isolation; it defines a number of constraints called "length valid restriction" and "whitespace valid restriction" and so on. The reference from Structures needs to make clearer what is going on and what parts of Datatypes are being appealed to. Datatypes may also need to define a more useful term for the required relation on facet/value pairs.
[For the record, I should record the editors' thanks to Michael Kay for pointing out this problem in private email.]
On 2008-09-26, the working group adopted a proposal to address this issue by replacing the problematic phrases with references to the appropriate constraints and sections defined in Part 2 Datatypes. In particular, refer to constraint "Applicable Facets" to make sure facets are allowed, and refer to section "Constraining Facets" to make sure facet values are valid. The proposal (along with changes for other bugs) can be found at (member-only): http://www.w3.org/XML/Group/2004/06/xmlschema-1/structures.editorial0809.html