Interesting question! Here's my definition, which resembles the first option:

On a Bitcoin node running in a steady state, the local mempool is referred to as "clear" (or "cleared") while all pending transactions can theoretically fit in the next block under the 4MWU constraint.

Where steady state would be the one of a node which finished the IBD and now runs with persistent connection to other peers.

Frre space in a block could tell us about the miner's mempool, but that's not even certain, as there could be other reasons for a miner to not include some transactions (hey MARA!).