You can't escape the misunderstandings on passing etiquette at iRacing. Even some of the truly fast drivers have a curious outlook with regard to it, perhaps picked up from their favourite form of motorsport, or just assumed out of the hopefulness of being fast and feeling entitled to a passing maneouver. Single player races on rFactor, or Forza, etc., can't help, of course, where the AI is expected to simply yield regardless.
As it's meant to be a simulation I like to follow the real world thinking, which I think is best summed up in the Skip Barber school book, Going Faster. A book that is well worth the price of admission.
"If, at the brake point, your car is dead alongside the car you're
trying to pass, the overtaken car is obliged to leave room for you and
not simply turn into you at the turn in point. If, however, you're
trying to pass but you're not quite alongside, as in having the front
wheels up to the middle of the other car at the brake point, you haven't
made the pass; it's your responsibility to get out of the way of the
other car and yield the line to avoid a collision. The other driver
might yield and give you room at the apex, but you can't count on it. He
may not have even seen you if he hasn't been looking in his mirrors. If
you're not alongside, you've got to expect to be "chopped", which is
the racing term for another driver pulling across the nose of your car
going to the apex."
"1) If you are attempting a pass and are alongside at the braking
point, you have rights to the line from the turn in to the apex. The
overtaken car should yield."
"2) If you're not quite alongside at the brake point but draw
alongside before the turn in point, you technically have rights to the
line, but if contact happens, you're really to blame. You are taking the
chance in this situation that your guesstimate of the closing speed is
correct - that you'll make up the distance of a quarter car of half car
between the brake point and the turn in. If you guessed wrong and the
other car is still half a car length ahead at the turn in, expect that
the other driver will take the line and go for the apex. You didn't do
the pass - you got in the way."
"3) If you're behind the other car and attempt to make up a car
length or more between the brake point and the turn in, you're either a
wild optimist or a lot better braker than the other driver. Either way,
if you blow it, it's your fault."