That's because of the clientside lag compensation on hitboxes/player models in TF2. On his screen it was a direct hit, but if you check the demo his aim is off
Yep lag compensation. Here you can find other examples of apparently missed hits at 1:09 1:41 1:52 4:45 and you can maybe find a lot more Spoiler [youtube]http://www.youtube.com/watch?v=OIKFTn4RFVQ[/youtube] PS: Havent you watched war matches on stv ? I guess it's the same problem, sometimes you can find a scout firing all his rounds 1 meter away from his target and he gets a frag...