Al-lhsar (as used in the Qur’an) means blocking the path to the House of Allah. Allah says, [And complete the Hajj or `Umrah in the service of Allah. But if you are prevented (from completing it) send an offering for sacrifice] (Al-Baqarah 2:196).
Sheikh Sayyed Sabiq states in his well-known book, Fiqh Us-Sunnah: The author of Fath Al-`Allam says: “The scholars disagree concerning the place of slaughter on the Day of Hudaybiah whether it was within or outside the Sacred Precincts of Al-Haram. Apparently the words of Allah [and they hindered you from the Sacred Mosque and sacrificial animals] suggest that the animals were slaughtered outside the Sacred Precincts of Al-Haram. There are various views concerning this. One view—the majority view—is that a prevented person may slaughter his sacrificial animal within or outside the Sacred Precincts of Al-Haram. Another view, that of the Hanafi School, is that he must slaughter it within the Sacred Precincts of Al-Haram. A third view, that of Ibn `Abbas and a group of scholars, is that if a prevented person is in a position to send his sacrificial animal to the Precincts of Al-Haram he must slaughter it there, and only then terminate his ihram. If this is not possible, then he may slaughter it at the place where he is prevented.