For the purposes of the USGS data, domestic water use encompasses everything we do with water at home. “Common indoor water uses are drinking, food preparation, washing clothes and dishes, bathing, and flushing toilets,” the report explains. “Common outdoor uses are watering lawns and gardens or maintaining pools, ponds, or other landscape features in a domestic environment.”
The report credits a number of federal policy interventions with reducing home water use. The National Energy Policy Act of 1992 is a big one. It established efficiency standards for toilets (the now ubiquitous 1.6 gallons per flush), bathroom faucets (2.2 gallons per minute at 60 psi) and shower heads (2.5 gallons per minute at 80 psi). The legislation passed with overwhelming bipartisan support and was signed into law by President George H.W. Bush. Further amendments to the bill, passed in 2005, improved efficiencies for water-using appliances, such as dishwashers and washing machines.
It's worth pointing out that domestic water use accounts for just a tiny fraction of overall American water consumption, on the order of about 1 percent. Thermoelectric power (e.g., steam-driven electric turbines) accounts for 41 percent of all water use, while irrigation for crops eats up another 37 percent.
As part of its report, the USGS published this nifty map, breaking down the different water use categories at the county level.