Lives in area, making living (8)
I believe the answer is:
'living' is the definition.
'lives in area' is the wordplay.
'lives' becomes 'is' ('be' can be a synonym of 'live').
'in' indicates putting letters inside.
'area' becomes 'extent' (I've seen this before).
'is' inserted into 'extent' is 'EXISTENT'.
'making' is the link.
(Other definitions for existent that I've seen before include "Actual or current, having being" , "Having reality" , "Living" .)