Consensus rules define valid transactions and a nodes mempool policy defines what it considers standard?
Yes, that’s right. Whatever a node accepts to its mempool, it will use to build block templates and relay to peers. The name is derived from a function called isStandard(…) in the Bitcoin Core code base, which implemented some of the mempool policies.
Are there any consensus rules surrounding the size of op_return?
OP_RETURN outputs are not limited by consensus rules other than indirectly per the block size limit.
isStandard(…)in the Bitcoin Core code base, which implemented some of the mempool policies.