The definition of an inactive JW is that they are not active in their primary commission, which is of course the preaching of the good news of God's Kingdom. [Note: This refers specifically to preaching to non-Witnesses, whether in door-to-door "field service" or by some other method. This activity is structured, and time spent is recorded, reported, and compiled.] To my knowledge, this is the case if a Witness does not engage in preaching for a whole calendar month, but extenuating circumstances can be taken into account with the elderly and infirm being able to report much smaller intervals of activity. If a person is inactive they remain classified as this for three months following until they show that they are once again active in the service. Having said this inactivity is can also be accompanied by non attendance of meetings etc, but the primary definition is due to not being involved in preaching which in itself is a condition of "membership".
The difference between an active and inactive member can involve the duties that they are able to perform in the congregation as only those in good standing may be involved in some teaching assignments in the congregation (what would be the point of someone telling others to preach when they themselves do not?). Also persons that become inactive will be given extra attention to try and find the reason for inactivity and help them to return to service.
The count of members published per country every year includes only "active" members.