In my answer at What, in simplest terms, is gauge invariance?What, in simplest terms, is gauge invariance?, I mentioned that in certain contexts there can be a "gauge theory" with a local symmetry that leave the Lagrangian/Hamiltonian invariant and whose degrees of freedom are physically observable. My follow-up got very long, so I decided to address the Lagrangian and Hamiltonian cases separately. Here are my thoughts on the Lagrangian case - anyone else is of course welcome to contribute their own. The case of lattice gauge Hamiltonian is addressed at Hamiltonian lattice gauge theory with physically observable local degrees of freedomHamiltonian lattice gauge theory with physically observable local degrees of freedom.