diff --git a/examples/standard/guessing_game.lux b/examples/standard/guessing_game.lux
index c29f1dd..071f4f8 100644
--- a/examples/standard/guessing_game.lux
+++ b/examples/standard/guessing_game.lux
@@ -1,25 +1,44 @@
 // Number guessing game - demonstrates Random and Console effects
+//
+// Expected output:
+// Welcome to the Guessing Game!
+// Target number: 42
+// Simulating guesses...
+// Guess 50: Too high!
+// Guess 25: Too low!
+// Guess 37: Too low!
+// Guess 43: Too high!
+// Guess 40: Too low!
+// Guess 41: Too low!
+// Guess 42: Correct!
+// Found in 7 attempts!
 
-fn gameLoop(secret: Int, attempts: Int): Unit with {Console} = {
-    Console.print("Guess the number (1-100), attempt " + toString(attempts) + ":")
-    let guess = Console.readInt()
-    if guess == secret then
-        Console.print("Correct! You got it in " + toString(attempts) + " attempts!")
-    else if guess < secret then {
-        Console.print("Too low!")
-        gameLoop(secret, attempts + 1)
-    }
-    else {
-        Console.print("Too high!")
-        gameLoop(secret, attempts + 1)
-    }
+// Game logic - check a guess against the secret
+fn checkGuess(guess: Int, secret: Int): String =
+    if guess == secret then "Correct"
+    else if guess < secret then "Too low"
+    else "Too high"
+
+// Binary search simulation to find the number
+fn binarySearch(low: Int, high: Int, secret: Int, attempts: Int): Int with {Console} = {
+    let mid = (low + high) / 2
+    let result = checkGuess(mid, secret)
+    Console.print("Guess " + toString(mid) + ": " + result + "!")
+
+    if result == "Correct" then attempts
+    else if result == "Too low" then binarySearch(mid + 1, high, secret, attempts + 1)
+    else binarySearch(low, mid - 1, secret, attempts + 1)
 }
 
-fn main(): Unit with {Console, Random} = {
+fn main(): Unit with {Console} = {
     Console.print("Welcome to the Guessing Game!")
-    Console.print("I'm thinking of a number between 1 and 100...")
-    let secret = Random.int(1, 100)
-    gameLoop(secret, 1)
+    // Use a fixed "secret" for reproducible output
+    let secret = 42
+    Console.print("Target number: " + toString(secret))
+    Console.print("Simulating guesses...")
+
+    let attempts = binarySearch(1, 100, secret, 1)
+    Console.print("Found in " + toString(attempts) + " attempts!")
 }
 
 let output = run main() with {}
diff --git a/src/diagnostics.rs b/src/diagnostics.rs
index 7f2bad2..10c691b 100644
--- a/src/diagnostics.rs
+++ b/src/diagnostics.rs
@@ -241,50 +241,68 @@ pub fn render_diagnostic(
         colors::RESET
     ));
 
-    // Source code snippet with line numbers
-    let line_num_width = end_line.to_string().len().max(4);
+    // Source code snippet with line numbers and context
+    let context_lines = 2; // Show 2 lines before and after
+    let start_line = line.saturating_sub(context_lines).max(1);
+    let end_context_line = (end_line + context_lines).min(source.lines().count());
+    let line_num_width = end_context_line.to_string().len().max(4);
 
-    // Show the problematic line(s)
-    for line_num in line..=end_line {
+    // Show context before, error lines, and context after
+    for line_num in start_line..=end_context_line {
         if let Some(source_line) = get_source_line(source, line_num) {
-            // Line number
-            output.push_str(&format!(
-                "{}{:>width$} │{} ",
-                colors::DIM,
-                line_num,
-                colors::RESET,
-                width = line_num_width
-            ));
+            let is_error_line = line_num >= line && line_num <= end_line;
 
-            // Source line
-            output.push_str(source_line);
-            output.push('\n');
-
-            // Underline the error span
-            let underline_start = if line_num == line { col - 1 } else { 0 };
-            let underline_end = if line_num == end_line {
-                end_col - 1
+            // Line number (dimmed for context, normal for error lines)
+            if is_error_line {
+                output.push_str(&format!(
+                    "{}{:>width$} │{} ",
+                    colors::DIM,
+                    line_num,
+                    colors::RESET,
+                    width = line_num_width
+                ));
+                // Source line (normal)
+                output.push_str(source_line);
             } else {
-                source_line.len()
-            };
-
-            let underline_len = underline_end.saturating_sub(underline_start).max(1);
-
-            output.push_str(&format!(
-                "{}{:>width$} │{} ",
-                colors::DIM,
-                "",
-                colors::RESET,
-                width = line_num_width
-            ));
-            output.push_str(&" ".repeat(underline_start));
-            output.push_str(&format!(
-                "{}{}{}",
-                severity_color,
-                "^".repeat(underline_len),
-                colors::RESET
-            ));
+                // Context lines are fully dimmed
+                output.push_str(&format!(
+                    "{}{:>width$} │ {}{}",
+                    colors::DIM,
+                    line_num,
+                    source_line,
+                    colors::RESET,
+                    width = line_num_width
+                ));
+            }
             output.push('\n');
+
+            // Underline the error span (only for error lines)
+            if is_error_line {
+                let underline_start = if line_num == line { col - 1 } else { 0 };
+                let underline_end = if line_num == end_line {
+                    end_col - 1
+                } else {
+                    source_line.len()
+                };
+
+                let underline_len = underline_end.saturating_sub(underline_start).max(1);
+
+                output.push_str(&format!(
+                    "{}{:>width$} │{} ",
+                    colors::DIM,
+                    "",
+                    colors::RESET,
+                    width = line_num_width
+                ));
+                output.push_str(&" ".repeat(underline_start));
+                output.push_str(&format!(
+                    "{}{}{}",
+                    severity_color,
+                    "^".repeat(underline_len),
+                    colors::RESET
+                ));
+                output.push('\n');
+            }
         }
     }