Life

Life is a process of self-sustaining and self-generated action. Objectivism gives the concept a foundational role in ethics: because a living thing is the only kind of entity whose existence is conditional, life is the fact that makes values possible and man's own life is the standard by which his values are measured.

“There is only one fundamental alternative in the universe: existence or non-existence — and it pertains to a single class of entities: to living organisms. The existence of inanimate matter is unconditional, the existence of life is not: it depends on a specific course of action.”
~ Ayn Rand, "The Objectivist Ethics", The Virtue of Selfishness

Why the concept is fundamental

Matter cannot cease to exist; it changes form. An organism can. It stays in existence only by acting, continuously, to sustain itself, and if that action fails it does not change into something else — it stops being an organism at all.

That conditionality is what generates every evaluative concept:

"Good" and "evil" require a beneficiary. Nothing can be good or bad for a rock, because nothing that happens to it makes any difference to whether it exists.
An organism's life is its own standard. What furthers the life of a given kind of organism is good for it; what threatens it is evil for it. This is not read into nature from outside — it is what the organism's actions are, in fact, directed at.
Life is the ultimate value in the strict sense: an end in itself, not a means to any further end, and the thing that makes all other ends possible.

Objectivism therefore rejects the idea that values are intrinsic properties of objects, and the idea that they are arbitrary preferences. See Value, Intrinsicism and Subjectivism.

How different organisms sustain themselves

The means of survival differ by the nature of the entity, and this is what makes ethics a specifically human problem:

A plant acts by vegetative function. It has no awareness and no alternatives available to it.
An animal that has perception acts by instinct and by the pleasure-pain mechanism. It cannot choose its values or misidentify them; it can only fail to obtain them.
Man has no automatic code. He has urges but no innate knowledge of what will satisfy them, and no instinct telling him how to farm, build shelter, treat disease or organise a society. His means of survival is reason, and reason is exercised by choice.

This is why a code of morality is necessary for man and not for anything else. See Ethics and Consciousness.

"Man qua man"

The standard is not the bare continuation of biological function. Rand's phrase is "man's life qua man": survival by the means proper to a rational being, over the full span of a lifetime, rather than for the next few minutes by any means available.

The distinction matters because most objections to the ethics assume the narrow reading. A man who lies, defrauds or lives off others may prolong his heartbeat, but he is not living by the means that make human life possible — he is living on the results of other people doing so. Range-of-the-moment survival is precisely what the standard excludes. See Man and Rationality.

Common misunderstandings

That "life as the standard" reduces ethics to staying alive. The standard is the kind of life proper to a rational being, which is why productiveness, love, art and the exercise of one's mind are not luxuries added on top of it but part of what it names.
That an argument from biology commits the naturalistic fallacy. The argument does not say that whatever is natural is good. It says that "good" is a concept that only has meaning relative to a goal, and that a living organism's own continued existence is the goal that gives rise to all the others. See Is-Ought Dichotomy.
That it implies a man must want to live. Nothing obligates a man to choose existence. The ethics tells him what follows if he does. Rand treated that as the fundamental choice, prior to morality rather than commanded by it.
That risking or giving one's life refutes it. A man who would not want to live without a particular value is not sacrificing when he defends it. What the ethics rejects is the surrender of a greater value for a lesser one. See Sacrifice.

Discussion

References

Rand, Ayn. "The Objectivist Ethics", The Virtue of Selfishness. New American Library, 1964.
Rand, Ayn. For The New Intellectual — Galt's speech, on life as a process of self-sustaining action.
Peikoff, Leonard. Objectivism: The Philosophy of Ayn Rand, chapter 7.

External links

Life at the Ayn Rand Lexicon