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Demarcation was a Smallville slash novelette by Livia Penn, posted in April 2002. It was originally posted to either ClarkLex or ClarkLexFic (or possibly both, as for a time both lists accepted fic posts) and the Smallville Slash Archive.
It was written in response to a growing trend of angsty, depressing or super-dark futurefic stories in Smallville, where Clark and Lex had a horrible falling-out or bad break-up, and ended up as mortal enemies. In a response to a story of Livia's, Callaesthetics, that fit this trend, The Spike told Livia that she was beginning to hate sad futurefics. 
Livia took this as a challenge to write a story where there was no great "Rift," just Clark and Lex growing apart and losing touch with each other like normal people. Furthermore, in Demarcation, Lex falls for Superman, not Clark; Lex and Clark never actually have a scene together in the story. This was perhaps the first SV futurefic to feature Lex/Superman as a pairing.
People liked it a lot.
There was quite a bit of speculation on TWOP among readers as to just when Lex guessed Superman's secret identity. Other readers really wanted a sequel to find out what Clark's reaction would be to Lex's final actions in the story, but a sequel was never written. 
- See the Author's Notes at the end of Demarcation.
- Comment on Livia's LJ, 'demarcation' by Livia Posted April 1, 2002. Accessed November 29, 2008.