From
http://mlb.mlb.com/NASApp/mlb/mlb/of...s/batter_6.jsp
6.10
Any League may elect to use the Designated Hitter Rule. (a) In the event of inter league competition between clubs of Leagues using the Designated Hitter Rule and clubs of Leagues not using the Designated Hitter Rule, the rule will be used as follows: 1. In World Series or exhibition games, the rule will be used or not used as is the practice of the home team. 2. In All Star games, the rule will only be used if both teams and both Leagues so agree. (b) The Rule provides as follows: A hitter may be designated to bat for the starting pitcher and all subsequent pitchers in any game without otherwise affecting the status of the pitcher(s) in the game. A Designated Hitter for the pitcher must be selected prior to the game and must be included in the lineup cards presented to the Umpire in Chief. The designated hitter named in the starting lineup must come to bat at least one time, unless the opposing club changes pitchers. It is not mandatory that a club designate a hitter for the pitcher, but failure to do so prior to the game precludes the use of a Designated Hitter for that game. Pinch hitters for a Designated Hitter may be used. Any substitute hitter for a Designated Hitter becomes the Designated Hitter. A replaced Designated Hitter shall not re enter the game in any capacity. The Designated Hitter may be used defensively, continuing to bat in the same position in the batting order, but the pitcher must then bat in the place of the substituted defensive player, unless more than one substitution is made, and the manager then must designate their spots in the batting order. A runner may be substituted for the Designated Hitter and the runner assumes the role of Designated Hitter. A Designated Hitter may not pinch run. A Designated Hitter is "locked" into the batting order. No multiple substitutions may be made that will alter the batting rotation of the Designated Hitter. Once the game pitcher is switched from the mound to a defensive position this move shall terminate the Designated Hitter role for the remainder of the game. Once a pinch hitter bats for any player in the batting order and then enters the game to pitch, this move shall terminate the Designated Hitter role for the remainder of the game. Once the game pitcher bats for the Designated Hitter this move shall terminate the Designated Hitter role for the remainder of the game. (The game pitcher may only pinch hit for the Designated Hitter). Once a Designated Hitter assumes a defensive position this move shall terminate the Designated Hitter role for the remainder of the game. A substitute for the Designated Hitter need not be announced until it is the Designated Hitter's turn to bat.
Basically it says if the DH plays defense the pitcher then bats, AND if the Pitcher plays another defense position after being lifted from pitching the DH spot is lost also. Also, the spot is locked and cannot be moved, from like the cleanup spot to 9th in the order.