Good question, I think it is probably really about impact.
A change that is an improvement is really an improvement in the status quo eg. saving two minutes of an existing 60min process which has no impact on other processes or people. I think innovation is where the change you are making has impacts beyond the existing process, either by changing who does something, whether it is done at all or how it happens. Lastly I think the term (in health at least) “clinically relevant” is important. As in the effect of the change is material to the people experiencing the change (patients, population, clinicians etc).
Using my frame of reference above (here) I think improvement fits into horizon 1.
@robyn.whittaker has a much more eloquent description in a paper she did in 2020 - here