The meaning has only “wandered” due to the marketing of dishonest hosting companies, and their partially self-deluded customers who want to believe the marketing in order to avoid doing the hard work of actually self-hosting.
I'm not so sure. Software people have a tendency towards abstraction, and often the bottom layer in their opinion of their own role is where you have OS control, without knowing much about the network and physical.
Whether that's reasonable, well, I kinda liked the underlayer and thought it was part of a good education. But not everyone agrees.
- Power + cooling, physical security, network. (Old school LAN party)
- Can you access the bare metal OS? (Hetzner/OVH bare metal)
- Can you access a VM and decide what runs on it? (EC2 + associated services, K8s, etc, etc)
- Can you run a function? (Lambda for example)
So the meaning has wandered to something between the first and second, IMO.