I can't tell you what art is, but I can tell you what Lomography is.
Lomography is taking a $35 to $40 plastic point-n-shoot camera from the ex-USSR, coming up with a story about it's special properties of light amplification (which is just slowing down the shutter), packaging it with a poster and a T-shirt, and convincing people it's hip and trendy, and charging $160 for it.
Can people make "art" with it? Sure, but it's mostly about cash money!!! Skip the T-shirt and poster, and get an Olympus Stylus Epic for $80 or $90, set it on "nightscene" exposure mode, and you have a much better camera that'll do the same thing as a Lomo camera for half the price.
"Lomo" has come to refer to many plasticy cameras coming out of the ex-USSR, and some aren't too expensive, and do a pretty good job (such as the Lubitel TLR). If folks want to use a plastic camera, have fun, make art, then more power to them. I just don't like the excessive price, and hipster marketing campaign that the Lomo sellers are using. Rather than educate their customers in photo basics (slow sync technique), they try to shroud it in some mystery of "Dr. Lomo" or whoever. They even try to push their own "special" film, which is just cheapo 35mm, and processing.
All that bitching aside, I have friends who've bought these things, and have fun with them. They agree that it's probably silly to pay so much for a cheap camera, poster, and a T-shirt, but they like it. To each their own, I guess.