This is a good question. When I say that I'm in the drops, I usually mean that my hands are deep into the hooks, directly behind the levers, and that my hands are nearly vertical. This is where my hands are when I'm cornering, sprinting, or descending. Anytime there's high stress.

However, you could also say that you are in the drops when your hands are on the portion of the bar that extends backwards, quite aways from the lever, and they are horizontal. This is a low stress position and you could be cruising without need to reach the levers so immediately.