Most religions have rigid and at times elaborate rules about sexual conduct. Buddhists have the Third Precept -- in Pali, ‘Kamesu micchacara veramani sikkhapadam samadiyami’ -- which is most commonly translated "Do not indulge in sexual misconduct." However the early scriptures are ambiguous about what constitutes "sexual misconduct."
Monastic Rules - Monks and nuns follow the many rules of the Vinaya-pitaka section of the Pali Canon. An example, monks and nuns who engage in sexual intercourse are "defeated" and expelled automatically from the order. If a monk makes sexually suggestive comments to a woman, the community of monks must meet and address the transgression. A monk should avoid the appearance of impropriety by being alone with a woman. Nuns may not allow men to touch, rub or fondle them anywhere between the collar-bone and the knees.
most schools of Buddhism in Asia follow the Vinaya-pitaka, with the exception of Japan. In Japan today -- and in schools of Buddhism imported to the West from Japan -- the issue of monastic celibacy is decided differently from sect to sect and from monk to monk.
Lay Buddhists - Lay Buddhists and the vague precaution about "sexual misconduct." People take cues about what constitutes "misconduct" from their culture, and we see this in much of Asian Buddhism. However, Buddhism began to spread in western nations just as many of the old cultural rules were disappearing. So what's "sexual misconduct"? We can all agree, without further discussion, that non-consensual or exploitative sex is "misconduct." Beyond that, it seems that Buddhism challenges us to think about sexual ethics very differently from the way we may have been taught to think about them.