Policy is the usual method or direction the convention or convention management would expect to decide controversial concerns. Policies address the way to decide problems not already directly addressed by Rules.
For example, a convention may have a Rule prohibiting edged weapons in public areas. Thus no swordfights with live steel blades in the hotel lobby. However, a wooden sword with obviously rounded edges does not violate the edged weapons rule. Convention Policy should be set so that a swordfight with wooden swords would be similarly banned.