It was never stated exactly how James and Lily defied Lord Voldemort, although there are some events which could be applicable:
When asked, J.K. Rowling said the following:
"It depends how you take defying, doesn't it. I mean, if you're counting, which I do, anytime you arrested one of his henchmen, anytime you escaped him, anytime you thwarted him, that's what he's looking for. And both couples qualified because they were both fighting.
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Also, James and Lily turned him down, that was established in "Philosopher's Stone". He wanted them, and they wouldn't come over, so that's one strike against them before they were even out of their teens."
Lily Potter defied him a fourth time by refusing to allow Voldemort to kill Harry Potter when he was a baby.
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James Potter disagreed with Lord Voldemort's view on the wizarding world and his attempts to take it over. To Lord Voldemort, James Potter was just in his way of killing Harry Potter.
James and Lily Potter were killed in their cottage in Godric's Hollow by Lord Voldemort on the 31st October 1981. Voldemort entered the house and was met by James, who had left his wand in the living room. James shouted at Lily, who was also wandless, to escape before Voldemort murdered him. Voldemort then went upstairs where Lily was barricading the door. She put Harry into his crib and then stood over it, begging Voldemort not to kill him. He told her to stand aside and, when she refused, he killed her before turning his wand on Harry.
Lily Evans (Potter) was played by Ellie Darcey-Alden as a child, Susie Shinner as a teenager and Geraldine Summerville as an adult.* Please note, that this is Harry's mother. His daughter is Lily Luna Potter.
Lord Voldemort. Because of the terror he spread in the past, most wizards and witches - with the notable exception of Albus Dumbledore, and Harry Potter - are afraid to pronounce his name.
Yes. Severus Snape was bullied by James Potter and his friends who despised Snape and his friends for bullying muggle-born students. James later joined the Order while Snape became a death eater making them enemies who fought for different sides in the war. James also married Lily Evans, the girl that Snape always loved.