So what's the actual definition of experience when trying to apply for a position at a game company?

Does it mean you have to have been paid to work on a game project, or does a solid portfolio demonstrate a significant level of experience?

Are you granted experience from someone else or can you pretty much just make your own?

experience is the catch-22 of the games industry. Many companies require it, but obviously people trying to break in have to get it. Experience covers so much... knowledge, team work, dedication, a basic understanding of how the industry as a whole functions - to name a few more important examples. It doesn't matter whether you've held a job in the past so long as you can show proof that you understand all these things and can apply them towards the position you're looking to get.

Long answer short: a well built portfolio is what anyone needs whether you're a designer, artist, musician or programmer. Plenty of resources out there to find details on specifics for each. Besides GameDev.net also look into GameCareerGuide.com