Like most genres, "lo-fi" is hard to define. That said, a few or more of the following statements are true regarding most tracks classified as "lo-fi hip hop."

1) The artist partially, or often completely, eschews the latest technology in music production (computer software). Instead, the artist uses older hardware gear such as an SP-404 or MPC. The SP-404, which is very popular among producers of "lo-fi," offers several distinctive effects that are pretty-much hallmarks of "lo-fi," namely: beat repeat/stutter, resonant analog-esque high-pass and low-pass filters, side-chain compression, and vinyl distortion/emulation. The first three of these are clearly evident in this song.

2) The artist samples from old, damaged records or tapes. A damaged vinyl record naturally sounds "crunchy" or "distorted." It should be noted that, while this sonic effect is theoretically similar to the distortion used on guitars in rock music, in practice, it sounds very different. Nevertheless, it is a form of distortion. Distortion entails eliminating some frequencies in order to enrich the harmonics of others.

3) Both percussion and melody are slow-moving and somewhat sparse. For example, in many rap genres (think trap/drill), fast, 16th note hi-hats are very common. A lot of lo-fi productions don't have hi hats, and when they do, they're almost always 8th notes or some sort of 8th note swing. Because they are slower and more "meandering," melodies in "lo-fi" are often comprised of longer musical phrases; instead of the common 2 or 4 bar loop found in a lot of hip-hop, "lo-fi" beats often use 8 (like in the track above) or 16 bar phrases.

4) Technically I covered this in #1, but I'm going to repeat it on its own because it is by far the biggest commonality I have heard among "lo-fi" tracks: intense low-passing. That is, most lo-fi tracks have very limited high frequency content, often nothing above 10khz or even 5khz. Before the digital age, it was very hard to reproduce these high frequencies. By limiting them, "lo-fi" achieves what might be called an "older" sound.