I've only heard this in one context from one sort of person: people who go to bars and dance clubs and use "recreational" drugs (including legal ones) and basicly try to live the VH1/MTV "party hardy" lifestyle, attacking someone else for not doing that. So the meaning they're using it for is pretty simple: "life" = loud dance parties and drugs.

Given the fact that it's always used in hostility, I've always taken it as a sign that they actually secretly find their prescribed lifestyle as empty, pointless, fake, and unsatisfying as I would. If they were really having as much fun with their definition of "life" as they say, then talking about it and trying to get someone else involved in it would make them cheerful, not hostile.