Frank,
I wonder if we've really framed the question? Most of the answers have focused on process, with a few on product. But what about the goal of the work itself, or the "goal" of owning the result of that work? Then there's the question of motive: why do we want the label? Because it will sell better? Because it will be cooler to own?
Then there's the question of agreement: since there's no higher authority (as there is with, say, french wines), does the term have any shared meaning beyond individual marketing? And what does it say about us, or the potential owners of a piece, that we desire the piece to be called handmade? Isn't it odd that both ends of the political spectrum desire the term, while the middle rests safely (and absolutely depends) on the mass-machined? Is it possible that Ruskin was right, and all possibility of self-expression ended with the introduction of manufactured wrought iron fencing (or machined dovetails)?
I've seen exactly this question devolve into 60 response threads, a morass of determinism and process oriented derivations, usually ending with appeals to convention, like, say, someone dragging out some foolish dictionary. But I've only ever seen one really good answer:
So, there's this guy. Let's call him, for the sake of argument, Travis Stinson. And he makes stuff. And it's not that nobody else can make stuff, maybe even exactly the same thing. But when you and I both see a piece he's made, we both say to ourselves: 'Oh, that looks like something Travis would make." Yes, he has tools, but what the heck, birds and monkeys have tools too, and make tools to make other things. But we can both agree that we 'believe' that Travis himself makes things. On an individual basis. Even if he makes three of them...
Thanks,
Bill