Too soon, the referee says.

South Africa are to throw into a line-out. Victor Matfield stands out from the line-out as a receiver.

Matfield then moves into the line-out and then John Smit throws the ball in.

The referee awards a free kick to Australia, saying: "Too early" and then "numbers."

Law 19.8 (i) Where the receiver must stand. The receiver must stand at least 2 metres towards that player’s goal line from that player’s team-mates who are line-out players and between 5 and 15 metres from the touchline until the line-out begins.
Sanction: Free Kick on the 15-metre line
Exception: The receiver may run into the gap and perform any of the actions available to any other player in the line-out. The receiver is liable to sanction for offences in the line-out as would be other players in the line-out.

The law says the receiver must be two metres away, where Matfield was. He then moved closer and eventually into the line-out. The law does not say when he may enter the line-out, but the International Rugby Board, whose main concern is the framing of the laws of the game, has ruled as follows:

Ruling 7 of 2004 (1) After the line-out commences the receiver can enter the line-out, and is free to do that which is normally done by players in the line-out. The receiver's ability to support the jumper is not an issue in Law.

And when does the line-out commence? When the ball leaves the hands of the player throwing it in.

It makes sense and numbers are relevant. A team calls a short line-out and the opponents conform. Then before the line-out starts the team puts another player in and thus has the advantage of one extra.