Lifesteal is usually referred to in a Basic Damage sense, but there is a Gem in Intellect that provides Ability Lifesteal. In both cases, the healing is based on the actual damage dealt after Defense Rating is factored. It is not capped by the target’s actual remaining Health. Meaning if you Critically Hit a Minion for 500 damage but the Minion had only 40 Health, you will still heal for the % of that 500 damage.
A thing to note is Lifesteal does apply to abilities that deal Basic Damage such as Serath’s Heaven’s Fury.
Spell Lifesteal also exists, and it works exactly the same as regular Lifesteal, except it is based on your ability damage.
((Lifesteal Rating/ 100) * Damage) as base healing power