The Price tag
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Obviously it is a very gray area, and a lot of people will consider my definition of "Hi Fi" to be too generous, but as a very general guideline I've always thought of these terms as follows:
Lo Fi: Compact "all-in-one" systems, characterized by lots of features, low quality, and low price.
Mid Fi: Systems that are typically built around a receiver, combining a preamplifier, amplifier, and tuner in one component, that is typically manufactured by relatively large companies such as Sony, Onkyo, Denon, Yamaha, etc.
Hi Fi: Components made by specialist manufacturers, with the emphasis on quality rather than features. The kind of stuff that is typically seen here at A'gon.
(common idea of) Lo-Fi: 1960's Japanese transistor radios, Small cheap (3" reels) portable 1960's tape recorders. Kids crystal radio sets. pre-electrical 78's via grammaphone.
(Audiophile idea of) Lo-Fi: Any new component costing less than $1,000 each
Mid Fi is anything costing between $1,000 and $10,000.
Hi fi is stuff costing $10,000 and up
interesting, if ultimately unsolvable question. in the auto world, lines are cleanly drawn on the basis of cost; thus a $15k Toyota Corrola would be considered entry-level (lo-fi), the $33k Avalon would be mid-fi and the $70k Lexus LS would be hi-fi (the six-figure Lamborghettis would thus be super-duper, ultra hi-fi). Because a car's performance, accoutrements and other quantifiable attributes are generally proportionate to its price, this a logical delineation. In audio, however, the delineations are much more ephemeral--i.e. the differences between a $1k preamp and a $10k preamp aren't always so obvious. Similarly, the prices of audio equipment can reach such astronomical heights that gear generally regarded as "hi-fi" (e.g. mcintosh or bryston) might be classified as "mid-fi" if only price was considered. ergo, it would seem that any objective standard for classifying audio would have to take into account not just price, but reputation, measured performance, retention of value and a dollop of snake oil.
the difference between the "fis" is a matter of opinion.
whatever criterion on proposes is subjective.
it is very difficult to arrive at definitions that are not subject to dispute.
using price is somewhat arbitrary, as is quality because of disagreements as to what constitutes quality.
it is essentially a philosophical question which has no definitive answer.
Expanding on my earlier post, I must respectfully disagree with those who seem to be using the three terms to distinguish between different kinds of audiophile-oriented equipment, particularly on the basis of price.
As even a casual perusal of these forums will show, there is lots of equipment priced well under $1K that can provide respectable audiophile-calibre sound. Referring to that equipment as "low fi" strikes me, frankly, as absurd.
Along the lines of my earlier comment, it seems to me that the three terms should be used to distinguish audiophile-oriented equipment, often made by specialist manufacturers, from mass market-oriented equipment, usually made by large corporations. The latter falling into one of the two lower categories, and the former being, at least ostensibly, "hifi."
Certainly there are hifi/high-end products that are sonic failures, and can be described as producing mid-fi sound (or worse), but without a frame of reference for those terms that is broader than the audiophile market, what would describing their sound as mid-fi even mean?