Definitions
The tech note, Transformation Rules and Definitions, starting with the section "Making Definitions for Indexed Objects" and going on through "Modifying Built-in Functions" address the issues raised in the OP about definitions, including the fact that almost any (unprotected) expression may be an LHS. The key restriction is that there is a symbol that is not Protected and not Locked to which the definition rule can be attached. For Set/SetDelayed the symbol is either the head or the head of the head (of the head...) of the expression. For UpSet or TagSet, the symbol may be at level 1; see their doc pages. Another restriction is that the expression functions as a pattern in the replacement rule created by the definition. The first part of the tech note deals with this.
For the example in the OP, $x_j=1$ is executed in the kernel as Set[Subscript[x, j], 1], which creates a DownValue for Subscript, which is an unprotected symbol in the System` context.
Btw, Plus is special: Why does this pattern with Plus not work for numbers?.
Boxes
Finally, box-structure seems irrelevant to making definitions. Boxes are principally used to structure input and output so that the front end and kernel can communicate. Box structures are just expressions, with the same nested structure; valid box structures are ones that the front end accepts. Subscript[x, j] is not a box structure. MakeBoxes[Subscript[x, j], StandardForm] converts it to the box structure that is displayed in the front end with a subscript, namely SubscriptBox[x, j]. Showing the display form of boxes is called "typesetting" in Mathematica.
Some functions for dealing with boxes:
MakeBoxes[expr, form]
MakeExpression[boxes, form]
RawBoxes[boxes]
DisplayForm[boxes]
ToBoxes[expr]
ToExpression[boxes]
The tech note, Textual Input and Output, discusses representing expressions by boxes. See also the tag wiki for [boxes].
PlusandTimes)! Instead, define the behavior of binary operators likeNonCommutativeMultiply(**) that don't have any built-in functionality. – march Apr 17 '23 at 18:22