In the absence of a CASA "defect" definition the dictionary definition will suffice, common dog really, it is defective in some manner. Can still be operational though.
Not sure I'm with the SDT's interp. on snag not being a defect, it is, otherwise it wouldn't be a point of interest to mention.
You can fly with an open MR entry, just depends on what that entry is, generally it needs to be major damage/defect or inop mandatory equipment that effects the airworthiness to effect a grounding.
Pilots are legally permitted to make a call on what constitutes an airworthiness critical defect or damage, rightly or wrongly. Just be conservative in the call as you are liable for what you write.
The torn seat upholstery example; A large tear is a defect but the seat is still perfectly operational and the aircraft can be considered safe to fly.
In the right company a Snags list for cosmetic items and things such as surface corrosion, slightly worn fittings etc,., the things pilots notice that engineers don't get the time to is a great system. In the wrong company it can get out of hand and detract from an effective MR system.
Maintenance release to cease to be in force
(ii) the aircraft has suffered major damage or has developed a
major defect, other than damage or a defect that is a
permissible unserviceability;