How?

By not being totalitarian. Totalitarianism is the extreme end of the spectrum where the party or individual attempts to control the totality of social, economic and political life. You can have non-democratic forms of government which allow significant social, economic and even political freedom, as long as it's expressed within certain bounds. Modern day China being a good example. Mao's China however was avowedly totalitarian and probably the second most extreme expression of totalitarianism there's ever been, after Cambodia under the Khmer Rouge. Is Putin's Russia totalitarian? Not yet, but it's certainly heading that way.

It seems like a valid distinction, but I do not agree with it.

If what you are doing does not bother the government you may be able to say "see, it is not that bad, they are not telling me what to do in the totality of social, economic and political life"; if, on the other side, you do something they disagree with, the distinction between totalitarism and non-democracy disappears.

In other words, to me the difference between being able to control and attempt to control are not that different. If it is possible, eventually somebody will attempt it. This is where checks and controls, division of power, etc. are useful.

Countries like Thailand are run by military juntas but are by no means totalitarian.