Determine your educational philosophy. There are many different philosophies of how to teach children. Whether you identify with a classical approach, a Charlotte Mason approach, the Thomas Jefferson approach or an eclectic mix of many philosophies combined, this will be a starting point for describing what you do.
Look at your child's academic progress. While it is easier to describe home-schooling if your child can easily fit into a grade-level mold, many do not. Take your child's varied academic levels into account in your description.
Go over the curriculum you have chosen for your child. If you have chosen something interesting, inject it into your description. For example, if your first grader is learning Latin, add that to your description. Not only will the Latin lessons impress, they will show the vast difference between what you do and typical schooling.
Include when and where you school in your description. For some people this is a big reason for home-schooling their children. If you school outdoors, in the car or on a boat, it is an interesting addition to your home-school description.
Keep your description short and to the point. If the person asking is interested in more information, they will make it known -- otherwise, they where just slightly curious, and a short, descriptive explanation will satisfy the question.