There are a number of interpretations of this specific rule, which have been discussed many times in various threads.
The general consensus, however, seems to be that:
"Archers are allowed to call shots for clarity
Meaning: If a hit is unclear to the receiving fighter, an archer is permitted to alert the fighter as to where the hit landed. The receiving fighter IS expected to take the hit as it is called (yes, even if it is wrong).
There is much debate regarding whether or not the fighter should take the hit, with two general camps: one side states that the archer has the final say, and the other side states that the fighter who was hit has the final say. I, myself, lean towards the archer has the final say.
Reasons for archer:
Archer can often see the arrow better than the one being hit.
One being hit often cannot or does not feel the arrow (armor, adrenaline, thinking maybe it was someone bumping into him/her, etc).
Reasons for receiver:
Archer can't always track their arrow.
Some archers call shots as they 'wish' they hit, not as they 'actually' hit.
I've found that in the majority of cases, archers call their shots accurately (or as accurately as possible), and that an archer can more often track their arrow than not track their arrow. It seems to work better if the final say is in the hands of the archer, and has worked that way for many years.
call out to let their target know..."
Archers do not HAVE to call a shot. Archers MAY call a shot, if they feel it necessary. This means that even if an archer does not call their shot, you are expected to take the hit. I've heard arguments from people that they didn't take an arrow hit because the archer didn't call the shot. BS.
In practicality, I find that myself (and most veteran archers I know) have adopted a policy of calling as few shots as possible. It's actually easier to just fire another arrow at the guy's head than to get into an argument about where and when the arrow hit. It's actually more often that I call my shot as -not a hit- than I call it as a hit (ie: someone takes a hit from an arrow that ricocheted off a shield, hit them with the shaft, or I honestly just don't feel hit solidly enough (grazes, eh), and I tell them to keep fighting).
It's also best to go out onto the field under the assumption that your opponent is honorable, will take their hits, and that you should have fun. Assume the same of the archers that shoot at you.
The rule is in contention, yes, but for the most part there's no reason why it should be. It's not 'archers' that are the problem with the rules. It's 'guys with a bow' who hear that archers can call their shots, and then do it on every shot. And there's only so much we can do about that, beyond trying to teach them the errors of their ways, and sending a big shieldman at them if they don't learn.