The following passages come from Wittgenstein’s magnum opus – Philosophical Investigations. An understanding of language games is essential to his philosophy.
A langauge game relates to philosophy in ways described in the previous three posts – it deceives us into belief that a word has a tantamount equivalence in reality, that when we say “time” or “morality” we are somehow pinning down real (not approximate) phenomena. Even the word “reality” is misleading – however, that does not impede the sensibility of the previous sentence. Consider the difficulty to defining a word without using that word.
All philosophy derives from language. Although the point seems obvious, for years the West was decieved into the validity of concepts and words. This is something that Eastern Philosophy has strenuously avoided for years. This carries enormous consequences for words like “God”, “Universe” which I will explore in the future.
65. Here we come up against the great question that lies behind all these considerations. – For someone might object against me: “You take the easy way out! You talk about all sorts of language-games, but have nowhere said what the essence of a language-game, and hence of language, is: what is common to all these activities, and what makes them into language or parts of language. So you let yourself off the very part of the investigation that once gave you yourself most headache, the part about the general form of propositions and of language.”
And this is true. – Instead of producing something common to all that we call language, I am saying that these phenomena have no one thing in common which makes us use the same word for all, – but that they are related to one another in many different ways. And it is because of this relationship, or these relationships, that we call them all “language.” I will try to explain this.
66. Consider for example the proceedings that we call “games.” I mean board-games, card-games, ball-games, Olympic games, and so on. What is common to them all? – Don’t say: “There must be something common, or they would not be called ‘games'” – but look and see whether there is anything common to all. – For if you look at them you will not see something that is common to all, but similarities, relationships, and a whole series of them at that. To repeat: don’t think, but look! – Look for example at board-games, with their multifarious relationships. Now pass to card-games; here you find many correspondences with the first group, but many common features drop out, and others appear. When we pass next to ball-games, much that is common is retained, but much is lost. – Are they all ‘amusing’? Compare chess with noughts and crosses. Or is there always winning and losing, or competition between players? Think of patience. In ball games there is winning and losing; but when a child throws his ball against the wall and catches it again, this feature has disappeared. Look at the parts played by skill and luck; and at the games like ring-a-ring-a-roses; here is the element of amusement, but how many other characteristic features have disappeared! And we can go through the many, many other groups of games in the same way, can see how similarities crop up and disappear.
And the result of this examination is: we see a complicated network of similarities overlapping and criss-crossing: sometimes overall similarities, sometimes similarities of detail.
67. I can think of no better expression to characterize these similarities than “family resemblances”; for the various resemblances between members of a family: build, features, colour of eyes, gait, temperament, etc. etc. overlap and criss-cross in the same way. – And I shall say: ‘games form a family.’
75. What does it mean to know what a game is? What does it mean, to know it and not be able to say it? Is this knowledge somehow equivalent to an unformulated definition? So that if it were formulated I should be able to recognize it as an expression of my knowledge? Isn’t my knowledge, my concept of a game, completely expressed in the explanations that I could give? That is, in my describing examples of various kinds of game; shewing how all sorts of other games can be constructed on the analogy of these; saying that I should scarcely include this or this among games; and so on.
In my mind there are three paramount consequences of language games:
1.) Meaning is not inherent, but instead created in different situations.
Use of language is analagous to the rules of a game and strategy. These are clear to the participants without suffering a philosophical crises that there is no rigid definition of how to play a game. We know how to play games despite ambiguities, and do not trouble ourselves to resolve these difficulties before playing. Philosophy is similar to worrying about the trappings of langauge and definition without acting. – And we are beginning to see the grammatical paradox of Active Philosophy but also how to work around this.
In essence, meaning is created by people, in everyday use, as a flame burns oxygen.
2.) Philosophy is limited and deceptive. But its origins are inevitably found in language itself. That is not to say that it is not useful. But it can often become convoluted, dangerous. “What is the case” can become the case itself.
Wittgetstein said that his aim in philosophy was “to show the fly the way out of the bottle.”
But what do we do once out of the bottle?
3.) Reality is much more elusive than we conceive.
Regardless, we know how to behave without having to consider our behaviour. Is this an indictment of thoughtfulness? – Not at all. On the contrary, careful consideration only leads back into life itself.
This is the essence of zen.
Active Philosophy 
I thought your point 1) was extremely interesting. I think you touched on what I’ve been trying to stress for a long time about an “active philosophy.” You call it a “grammatical paradox” but at the same time give a prescription for exactly what an active philosophy would address and how to address.
Looking up the defintion of philosophy on google (first hit):
http://www.thefreedictionary.com/philosophy
1. Love and pursuit of wisdom by intellectual means and moral self-discipline.
2. Investigation of the nature, causes, or principles of reality, knowledge, or values, based on logical reasoning rather than empirical methods.
3. A system of thought based on or involving such inquiry: the philosophy of Hume.
4. The critical analysis of fundamental assumptions or beliefs.
8. A system of values by which one lives: has an unusual philosophy of life.
The first four definitions and the 8th of these ‘definitions’ when the word/concept of taking action (be active) to achieve that end, active philosophy sounds very applicable to our reality. As you put it active philosophy helps us master and understand the ever changing “rules and strategies” of our reality.