Narrative (Story-based) vs. Simulationist (Wargaming)
In the simulationist wargaming tradition, the game rules provide a very limited set of options and players cannot attempt actions that are not explicitly covered by the rules. Under these constraints, a GM's role was as non-inventive as possible; they were a referee, an arbiter, someone who resolved conflicting intentions in a neutral manner. A wargame GM does not see themselves as responsible for driving the plot forward or providing an interesting or enjoyable experience for the players; they are there only to adjudicate the outcomes of player actions.
This adjudication might involve the GM being omniscient about player position and capabilities, while the players themselves have limited information. Imagine a game of chess in which each player can see only their own pieces and the squares immediately adjacent to their pieces. The GM's only job is to tell the players when their pieces have contacted or can see the pieces of their opponent. We know all the rules of vision, movement and capture. A player cannot appeal to the GM and say 'I'd like my knight to try to move only forward, but not over'. They cannot say 'I'd like my pawn to advance, but stealthfully so it can see but not be seen.' They cannot say 'I'd like my king to try to invent a spyglass to see further'. No action is permitted for which there is not already a rule, even though a GM is still required to adjudicate the game play.
David Wesley added an element of narrative style to this wargaming tradition in the first Braunstein game. One of the key innovations was "open-ended rules allowing the players to attempt any action, with the result of the action determined by the referee." As soon as players are permitted to take actions not covered by the rules, the role of the GM shifts from adjudicating results to inventing results. At the point in time when the GM's goal is not to invent realistic results but rather to invent results that tell an entertaining story - that is, that the game play 'relies heavily on GM judgement', then you have narrative or story-based elements in your game.
All RPGs will contain elements of both simulationism and narrativism. The role of the GM will lie somewhere along a spectrum between the two. To the extent that a GM is expected to make things up that serve the story, you have a narrative element in the game.
Suggested reading:
Why is the GM usually the driving force in RPG?
The discussion of GNS Theory here somewhat supports this description, but obliquely since it comes at it from the perspective of players. That is, 'what kind of game does a player want to play?', rather than 'what kind of decisions do the rules permit the GM to make?'. Still, a few quotes are illustrative:
"Narrativism relies on outlining (or developing) character motives, placing characters into situations where those motives conflict and making their decisions the driving force."
"Simulationism maintains a self-contained universe operating independent of player will; events unfold according to internal rules."