A Room is any space completely enclosed by walls and/or lintels. When standing within a room, on the right side of the screen is a blue banner (above the Gray "Account Balance" banner) that will tell you what the room is currently defined as, as well as its size in square meters. A Room can only have one label at a time.
In each house in Free play mode you can change the layout by demolishing the internal walls and creating something entirely different!
When there are no fixtures whatsoever, it will be labelled as an "Empty Room." Once any light fixtures, light switches, or electrical outlets are added the label will be just "Room".
The following is a table of each Room and an overview of what furniture causes it to be labelled in a certain way. More details are found on individual room pages.