For context, the main character in my story is a famous actor, and the funny thing about him is that both his parents worked in politics and were quite well known (think of like George and Kellyanne Conway). So I'm trying to figure out whether my OC would be considered a "nepo baby" because his parents were somewhat famous or not because his parents weren't famous in Hollywood like he is?
It's up to you as the writer to decide if anyone is going to label him as a "nepo baby." Did his parents help him get started in the entertainment business or did he do it on his own? Did they land him jobs or did he become famous because of his own hard work?
I've never liked the phrase 'nepo baby'. Having a parent or parents who work in the field you want to pursue gives you an advantage in almost any occupation. There are some, like show business and auto racing, where access seems to be at least as important as talent, but you still have to put in the work.
Based on the stated facts.... the answer is no. Using the Conway's as a template... while they are well known in politics, they aren't so famous they will have any real pull in Hollywood and their names don't automatically have cache that would translate to box office money. In other words, on it's face it not realistic to think the Conway's daughter would get roles in movies/tv shows she didn't deserve just because she is their daughter. If she becomes a famous star it will have to be on her own merit. Even if her parents' fame got her foot in the door, like in auditions, it's not realistic she would get roles on their name alone. She would have to actually be good. Unlike say the Obama's daughters, who (if they wanted to) could probably walk into Marvel and say "hey we want to be in the next Avengers movie" To simplify it, nepotism is mostly commented on when the level of the parents clout is greater than the skill/ability of the child. BTW: the statements above does not represent my political views, I am only comparing the Conway's and Obama's as far as level of fame, not as political or moral leaders, not even as parents.
Nicholas Cage specifically didn't want to make it because his uncle was Francis Ford Coppola, so he changed his last name and didn't let the general public know about the relationship. He made it on his own talent (a debatable topic). If you want your character to make it on his own terms, maybe he does something like that. Or if you want him to rely entirely on family influence etc, he could throw temper tantrums and keep saying "Do you know who my parents are?" I guess I'm saying decide which you want and then figure out how to show it.
You also have cases like Drew Barrymore, who comes from a line of actors. Maybe her parents called in favors to get her roles starting out, I don't know. Or it could simply be the name opening doors. Or producers and casting agents giving her a break, because they saw her around as she grew up. The only nepotism in those possibilities is where the parents actively helped get her career going.
My mother just offered to call the guy who I had issues with at the rehearsals (I am not a child and I asked her not to), she is not from the same field though. She is not famous or anything but her profession is a big topic these days in my country, and the play was dealing with the topic in a negative light, related to corruption etc. I thought I succeeded in staying as unbiased as possible and not letting my personal experience and opinions get in the way while helping write the play, but I am also not sure how much was that really possible for me to do. As for your question, do you mean nepo baby in a positive or negative sense?
I would dispute the assertions that a nepo baby still has to have talent. As one example, well three, consider Ursula Andress, Linda Evans, and Bo Derek. All 3 had the same husband - John Derek - who got them their start. Of those 3, the first had the most talent and the last has very little. Yet, Bo still did more movies than "10".
In Hollywood acting talent is one way to make it. Beauty and sex appeal is another. Someone with enough beauty or sex appeal doesn't even need famous relatives to get in.
I wanted to say being kind/reasonable can occasionally be a way to make it too, but I think it depends on the situation.