The long of it is that when Loli first became a thing in the 70s, it was just a legal loophole for ****philia and nothing more. Back then, Lolicon was split into several age groups.
Lolita Complex (11-14)
Alice Complex (7-10)
Heidi Complex (0-6).
After some extremely momentous events in the 80s that I'll skip to keep this short, it transformed into a whole sub-culture with a pro-worker's rights and pro-creative freedoms ideology. (Normally I'd skip over that part since the 80s were a complex time for us, but its relevant to this discussion.) Basically, there was a man named Takeshi Shudo. He was making a magical girl anime called Minky Momo, an anime that was a personal creative dream of his to make. Then, disaster struck and a toy company pulled support and merchandising deals for the anime, which caused the show to go under. Out of frustration, Shudo ended Minky Momo's abrupt final episode by having Minky Momo get run over and killed by a toy truck.
Shudo then announced the series was over before its original planned episode count. Then, suddenly, a huge influx of merchandise sales came in that meant Minky Momo could resume with a season 3 and properly finish this time. The sales came from adult ****s/Lolicons who wanted to support Shudo and Minky Momo till the end. This was seen as extremely controversial in Japan at the time, Shudo's response was "I don't care who they are or why they're supporting me. I just want to make my dream anime." Which was the first piece of public tolerance Lolicons had ever received and they ran with it, hence fighting for worker's rights and creative freedoms. This cultural change and the accomplishments achieved by it were extremely effective in getting the wider Japanese populace to accept Lolicons as non-criminals and contributing members of society.
Lolicons immortalized that huge change by making Minky Momo, a character that seamlessly blends childish body proportions with adult-like body porpotions. (Such as her thunder-thigh that were more massive than a child's thighs could ever be.) Minky Momo's specific porportions are different from those of someone with dwarfism. If you look at images of her, you'll know what I mean.
This happened at the same time Japan became one of the cultural capitals of the world in the 80s and 90s. As a result, Lolicons are goddamn near-everywhere throughout Japan's entertainment media industry from the 80s and on. There's a huge laundry list of entire corporations and genres in the video game industry alone that only exist because a Japanese Lolicon made it. (Another complex time for us that I will skip since its mostly irrelevant to the topic.)
Eventually, it got so big in Japan, that during 90s Japan, Lolicons and boob-lovers started butting heads. Mainly because the boob-lovers were upset at being called Lolicons for masturbating to giant-tittied 16-year-old highschool girls. The end of the conflict was a compromise that Lolicon would become a bodytype thing instead of an age-group thing. This change went easily because the change to a bodytype instead of an age group had already begun a decade prior when Minky Momo was immortalized as the physical blueprint for all Loli characters.
Lolicon was then re-categorized according to height and breasts size. Minky-Momo-like porportions are extremely common, but not required.
Lolicon (90cm-154cm, AAA-B cup size)
Loli-Baba (Same body requirements as Loli, but explicitly several decades old at the youngest.)
Toddlercon (Anything shorter than 90cm without being a pixie/fairy and a cup-size smaller than C.)
Pettanko, which is not really Lolicon itself, but its an important benchmark for judging Lolikko (155cm and up, cup-size AAA-B.)
Lolikko (Term for characters around the border of Lolicon and Pettanko, for example Kagamine Rin, Megumin, and Rebecca from Edgerunners are all Loli, but are also Lolikko since they're so close to the upper-limit of Loli.)
Boob-Loli (90cm-154cm, C and up cup size. Large breasted pixies/fairies with otherwise childish or Minky Momo-like faces/proportions also count.)