The splash is not always the reference
Rule 17 bases red penalty-area lateral relief on the estimated point where the ball last crossed the edge, with a two-club-length area no nearer the hole. The final resting place in water can be some distance away.
Imagine a shot entering a red area, bouncing onto a bank outside it and then rolling back in farther along. There are two entries. Following only the first splash or the final visible ball can miss the relevant last crossing.
Trace the path at the edge
A wide shot can be more useful than a dramatic water close-up because it preserves the route across the marked edge. The estimate concerns that route, not a line drawn backwards from wherever the ball finally disappeared.
In a simple viewing sketch, mark entry A, exit B and final re-entry C. The original illustration identifies C as the last crossing. It does not tell you how a real official estimated a hidden bounce or whether another relief option was selected. The essential point is chronological: last modifies crossed. Once that reference is identified, the relief-area measurement becomes intelligible. Do not transfer the red-area lateral option automatically to a yellow-marked area, whose options differ.
Questions answered
Is the first splash always the lateral-relief reference?
No; the last crossing of the edge is relevant.
Does the same lateral option automatically apply to yellow areas?
No. Red and yellow area options differ.
Sources & further reading
Official references for the subjects discussed. Service terms and device software can change.