If someone wears dresses and puts on make-up essentially for the odd evening every month or so, then they can hardly be said to be living as a woman, no. If someone does the same thing regularly, goes out shopping, working, travelling, taking hormonal treatment and changing their official name to a woman's, then they can be said to be living as a woman.
It is perhaps a bit of a grey area, but I suppose there are at least two sides to it. You must see yourself as a woman. Society at large, or at least the people who matter anyway (friends, family and the law) must agree. Some people who dress up every now and again very much think of themselves as women, at least while dressed up. Others don't. Each case is different -- what people want, need and feel like is different. But certainly, once it's a permanent thing, and you are on long-term hormonal treatment, it's more than just a change of clothes.