It can be relative in local circuits. I'll go by NBHA's standards for a 4D format.
1D-Fastest time of race
2D-.5 seconds off of fastest time
3D-1 second off of fastest time
4D-2 seconds off of fastest time
So lets say the winning time at an even was a 14.5
14.5 is the 1D time.
15.0 is the 2D time.
15.5 is the 3D time.
16.5 is the 4D time.
When a horse is advertised as a 2D, 3D, or 4D horse, it is COMPLETELY relative. Some regions are more competitive than others. So a 4D horse in one area could be a 2D/3D horse in another. While a 2D horse in one area, could be a 4D horse in another.
I, personally, think that the best way to gauge a horse's true Division is to run them at a Super Show. At these shows they are going against riders like Sara McDonald/ Bling, Brett Monroe/ SR, Shelby Singletary/ Ghost, Tyrney Steinhoff/Hotshot, and Ashley Snedeger/ VF Coup De Ville...
If you can see how the horse's time holds up to some of the best horses in the nation, then you know FOR SURE, what division the horse currently falls under.