I use neither of those definitions.
I define it as if the offense and defense were roughly equal do you have legitimate shot at a championship. I would say based on that definition the defense is close and the offense is nowhere near.
I think it's hard to make that assumption about the defense since the offense wasn't close. If the offense puts more points on the board, it's hard to say how the defense would have fared. Perhaps they stay about the same, perhaps they even get better with more help from the offense, but I think there's just as much chance that if the Dolphins were winning games more often, opposing offenses would have been under more pressure to score and would have. It's hard to judge just how good your defense is when the team is behind, you don't really find out how good they are until the team is ahead. Would teams like the Patriots, Ravens, Jets and Bears have put more points on the board if the game were closer and they felt like they needed to?