An unknown Swami says thus:
What is the definition of Sanatana Dharma? To simplify this term, “Sanatana Dharma” can be split into two parts: “Sanstanam” plus “Dharmam” is equal to Sanatana Dharma.
Now, what is Sanatana? And, what is Dharma?
Sanatana means: eternal; the one which has no beginning or no end is called Sanatana. That is why Prahalad says, “Sanskrit verse”: “because Lord has no beginning, He has no end, He is eternal”. Lord Krishna in Bhagawat Gita says, “Sanskrit verse”: “all souls are sanatanam; because Jiva-atma has no beginning, no end; they are always present – sanatanam”. Similarly, the one which exists without a beginning point, without an end point eternally, is called Sanatana.
Now, what is Dharma? What is meant by Dharma?
It is a set of rules or means that gets us towards ultimate good, ultimate well‐being, ultimate bliss is called Dharma.
Now combining these two, Sanatana Dharma means an eternal set of rules that gets all beings to four-fold purpose of life. We have four-fold purpose of life: Dharma, Artha, Kama and Moksha.
Dharma means a righteous way of life while living here; number two Artha: we need money to live in this world; no doubt we need money; but we should earn that money by righteous means, that is called Artha. We cannot earn that money in any way – not by dishonest means; by honest way; we should earn money within the limits of Dharma, that is called Artha. Number three Kama: we can enjoy this world. Yes can enjoy this world, no problem but that enjoyment should be within the limits of Dharma, that is Kama.
So observe Dharma; earn within the limits of Dharma; enjoy within the limits of Dharma – Dharma; Artha; Kama. Moksha: not only this life but after life – we should attain liberation; we should attain the lotus feet of Lotd; we should get rid of the cycle of lifes and deaths – “पुनर्पि जन्मम, पुनर्पि मरणम, पुनर्पि जननी, पुनर्पि जठरे शयनम (Taking births again and again; dying again and again; get mother again and again; dwelling in the womb of mother again and again)” – we should get rid of that, that is called liberation – Moksha.
So, we should have a righteous life, earn within the limits of Dharma, enjoy within the limits of Dharma and then attain liberation by observing this Dharma – this four-fold purpose of life we have got.
The set of rules which gets us to attain this foir-fold purpose of life is called Sanatan Dharma. It is that Sanatan Dharma.