"The policeman standing in the street is drinking water."
Translation:Policjant stojący na ulicy pije wodę.
First is Accusative, the other is Locative (or Genitive or Dative, but with such a word, Locative is obviously more likely to be used).
Wychodzę na ulicę -- I go to the street (I'm at home and I'm going outside to the street just outside my home) Idę na ulicę X -- I'm going to the X street
Czekam na ciebie na ulicy -- I'm waiting for you in the street Policjant stoi na ulicy -- The policeman is standing in the street
First example doesn't mean that "na ulicę" or any of its forms is a general term for "outside" like in Russian, it's not.