Best I can determine, the term "In the hole", referred to the batter following the batter on deck. Looking at old Baseball movies, some of the footage actually showed a second circle painted on the field between the on deck circle and the dugout. At one time, both the on deck batter and the in the hole batter both knelt in their circles awaiting their turns. Somehow the in the hole circle has no longer been painted on the latter day fields, probably for safety reasons, but the batter following the on deck batter is still considered to be in the hole.
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