To me retro is anything prior to the PS2 era. To me that represents the last paradigm jump in graphics capabilities gaming, as we know it, had.
I think as time goes on the term will continue to lose meaning, as its largely (to me) based on graphics. Earlier console generations used to have such large differences in performance between them that it was convenient and easily recognisable what you meant when you called the PS1 retro whilst playing on your PS2. However you find it a bit more difficult to call the PS2 retro when playing your PS4. Yes, the changes are very evident, but they're not as evident as they used to be.
That trend will continue, graphical improvements lie on a bell curve with a very perceivable ceiling, we already have strong enough hardware to have hyper realistic graphics almost indistinguishable to life, how much further is there to go? Will someone playing on their PS8 be able to call the PS5 'retro' in the same earnest as prior generations? I don't think so.
Game design philosophy or 'feel' like some have suggested also plays a big role in what is defined as 'retro,' too. But ultimately this runs into the same problem as using retro to define graphical generations. At some point innovational leaps turn into indistinguishable increments of improvement, and you hit the ceiling.
Perhaps the future of the term will lie in how we interact with games. Perhaps our way of interfacing will shift from controllers to VR/AR. Perhaps AI will completely change how we interact with story telling aspects of gaming. Perhaps even the hardware we'll use to play our games will shift more to services like Google Stadia. (God, I hope not.) All of these would redefine what it means to be 'retro.'
For example, we already see a very big shift in how games are structured and designed due to the absolute dominance of micro-transactions or Games-As-A-Service models. Battle passes, seasons, freemium games, the whole gacha industry explosion. To me this has a way more observable 'before and after' feel between generations than anything else within the past 15 years.
TL;DR : Most people use the term 'retro' to refer to graphical jumps between generations, but current gen gaming has started to hit the ceiling in terms of what more to improve, as such the improvements are more incremental and less noticeable. I believe the term retro will be rendered meaningless in the modern application or potentially recycled to refer to other aspects of gaming, such as ways of interacting with the game in a controller, story telling or even how we interact monetarily.