What actually makes someone an introvert or an extrovert?

Extraversion is one of the five broad personality dimensions that repeatedly emerge in psychological research, and it is measured as a continuous trait on which most people score somewhere in the middle rather than at the extremes. The core of it is not sociability alone but reward sensitivity and the tendency to seek external stimulation. People high in extraversion tend to experience more positive activation from social interaction and novel environments; people low in it tend to find the same environments depleting and to prefer lower-stimulation settings. Carl Jung introduced the terms, though modern trait research defines them differently than he did.

Shyness is a separate construct and the conflation causes real confusion. Shyness involves anxiety and fear of negative evaluation in social situations, and a person can be extraverted and shy, wanting interaction while finding it frightening, or introverted and entirely comfortable socially while simply preferring less of it. Social anxiety disorder is a clinical condition distinct from both. Similarly, introversion is not a preference for solitude in every context, and highly introverted people frequently enjoy deep interaction with familiar people while finding large unfamiliar groups draining.

Two evidence-based caveats about the popular treatment of this. The physiological story sometimes told, that introverts have higher baseline cortical arousal and therefore seek less stimulation, comes from Hans Eysenck's theory and has mixed empirical support rather than being established. And the widespread MBTI framework that sorts people into introvert or extravert types has weak psychometric properties, notably poor test-retest reliability and no evidence for the bimodal distribution its type categories assume, which is why research psychology uses continuous five-factor measures instead. The useful and defensible version is that stimulation preferences differ meaningfully between people, are reasonably stable, and are worth accommodating in how you structure work and social life.