living means alive, dead would cover non metalic clothes and weapons, wood, cloth, hide, leather, grass (hat), furs, wool, shell, silk, etc.
The restrctions generally apply to not wearing metal armor or carrying metal weapons, but also mean it's hard to carry metal gear, or a lot of coin around.
Your average mage would likely have sewn or glued shoes, avoid metal buttons and hooks on their clothes, and generally look like your average green on parade. . .but no too much in the way of clothes, unless needed, as eventually all that "dead" matter may begin to pile up weight.
Many a GM will rule "magical" dead organic matter shouldn't be considered "dead" as it's got an active magical aura (if not an active living aura). . .that's a house rule though.
On the flip side, I've never known a mage to take a casting penalty for "Your underwear, shoes, pants, socks, shirt, coat and overcoat are over the organic (dead) limit!" You certaily wouldn't find too many mages in northern climes, and many temperate ones would go south for the winter if GMs were sticklers for that rule ("I'd turn you into a crisp, but this damned fur coat has me over my ESF limit!").
I generally only drag it out if someone is blatantly trying to abuse it. . .otherwise I ignore it.