The biggest issue with the word "puppy mill" is it is not defined by law or by any other means. Not really. One person may call a breeder who produces 4 litters a year of a single breed a "puppy mill" even if they have excellent breeding standards and practices Another may call a breeder of more than one breed a "puppy mill." Another will define a puppy mill as anyone with several dogs kept in dog kennels. And yet another person will call someone who breeds a bitch every time she is in season a "puppy mill."
I think that the term Puppy Mill should be replaced with the difference between good and less good breeders and so forth.
A top of the line breeder will title dogs in their kennels and the dogs they breed. I prefer WORKING titles appropriate to the breed over Conformation Titles that only title looks. Temperament is strongly hereditary and a breed should show breed characteristics on a varied but consistent scale. This means that the temperament of a well bred German Shepherd with a lineage of working titles or actual work ([police, military or herding) may not be the ideal pet for person who is not active. The same can be said of a Golden Retriever or Labrador retriever that has a lineage behind it of successful hunting dogs. Working titles can reveal temperament that conformation titles may never reveal.
Top of the line breeders will get health tests on their dogs. In the German Shepherd this is either a hip, elbow and lower spine rating from Germany (such as A-1normal, A2 Fast Normal, A3 Noch Zuglassen for hips and then Mittel or fail for hips) or a rating from OFA (Excellent, good, fair or dysplastic). The SV will evaluate hips as early as 12 months old. OFA will give a preliminary rating at under 2 years but they won't give a final rating until the dog is 2 years old. There is also a Penn Hip rating that tests for laxity. For other breeds such as Labradors, Golden Retrievers and so forth, OFA and Penn Hip are the US standards. The ratings should be available to a puppy buyer. A breeding or a Noch Zuglassen to another dog with A-1 hips does not automatically mean the puppies will have him issues. Most dogs with Fair or Noch Zuglassen hips never take a lame step.. Fair hips are not dysplastic hips!!
The top of the line breeder will also do other health tests per the breed. I know that for the German Shepherd you test for Degenerative Myelopathy (DM) and the ratings can be Clear/Clear; Clear/Carrier or DM/DM. The first two the individual dog does not develop DM. The double clear dog can be bred to any other dog and the offspring should be DM clear and not develop disease. The Clear/Carrier dog must be bred to a double clear dog to produce offspring that are asymptomatic. The DM/DM dog will develop symptoms. DM is not specific to just the German Shepherd. Collies have different health tests such as for eyes (though hips and elbows are also often done in this breed). The buyer needs to know they health tests for their breed of choice and ASK about them.
A top line breeder will not sell you two puppies. A top line breeder will want references about the puppy buyer from the vet and associates who know you and how you care for animals. A top breeder will want to know your clear intended use for the dog (pet/working/sport and what sport and so forth). A top breeder will pick the puppy for you. The PRICE of a puppy from a top breeder will be high. $2500 and UP is not unusual.
Beyond that there are other good breeders. Some may buy their breeding stock from proven/tested lines and may focus on the pet market. The dogs are well cared for and clean. Some may have more than one breed. With these breeders you will need to do more investigating and while they will probably want references about you, you will also want references about them. These breeders may do some of what the top breeders do, but not all. Puppy price typically reflects this less stringent breeder from the top breeder. It does NOT mean they run a bad operation. It just means they may serve a sector of the market that is not willing to pay top price or may not desire all the back ground from a top breeder.
Others come after this. Some have their dogs kept in deplorable conditions.. and some are just breeding their bitch because it has papers and so does the neighbor's dog of the same breed and, again, price usually reflects this. Again, depending on what someone's opinion is, one or both could be a puppy mill.
I will add a word about price of a puppy. A $650 puppy may do just fine, but you need to do YOUR homework about the breed. You need to ask to see the pedigree and you need to ask questions pertinent to YOUR situation. Also, paying $3000 for a puppy does not guarantee the breeder is a top breeder. The buyer needs to ask questions.. and the less forthright the breeder is, the more you want to go elsewhere.
Last, and certainly not least, there is the impulse buyer. It is HARD to walk away from a litter of Labrador Retriever puppies all clamoring for you to play with them and not bring one home! If the person presenting the "purebred" puppies goes on at length about them being from an abused bitch and so forth and they state you are RESCUING the puppies, ASK to see their 501-3c NPO status. If that cannot be presented, you are not "adopting" or "rescuing" anything. You are BUYING a dog.
When it comes to buying a dog from anyone, the same mantra goes as for all things purchased, "Buyer Beware" and beyond that, "Buy be Aware."