It can be as simple as where the business is located. Perhaps the useful definition of a lifestyle business is one where explicitly part of business's purpose

It can be as simple as where the business is located. Perhaps the useful definition of a lifestyle business is one where explicitly part of business's purpose is to achieve personal non-business goals for one or more people involved. They can be tiny or fairly large, though at some point the distinction probably loses meaning. Like the difference between a "startup" and a "new business" they can be useful distinctions but are often used sloppily.