I would argue that it doesn't represent the true picture of what is really going on. The only people who can truly determine if they are active is the individual user, Reviewer, and HQ at geocaching.com. The Reviewers have a lot more tools they use to determine if a user is active. Obviously, HQ would have all the tools. My local reviewer confirmed all of the above since I had a similar question and wanted to know what active means.
The simple definition is they have an account with geocaching.com that is not suspended, locked, or disabled by user. Active may simply mean they have been visiting their profile, logged a note, or edited etc. It should not be assumed they were out geocaching but, even if they were, they do have the right to make that decision whether it's a good or bad one. Some geocaches can be found without exposing anyone and hopefully if people geocache they keep that in mind and only go after the caches where they can solo and not pose a threat.