What exactly would happen in a, say, simplified agrarian model where people can homestead and own much land as they can work, but if they stop working it and hire employees to work it or rent it out then they lose it?

People would start thinking about how best to bend the rules.

How much work is required to own the land? I would try to own as much land as possible with minimum effort. Or grow something that gives maximum profit per unit of care. (Wood?)

Probably no one would hire employees, because that would be extremely shortsighted, if you would lose the land as a result. If I can't work on the land anymore, I might as well just ignore it, and perhaps hope that no one will notice it immediately. I would rather buy machines than hire people, even if the machines were expensive and people cheap, because the machine could give me a profit in long term, while people would always mean a loss in long term.

If you lose the land as long as you employ someone e.g. 12 months in a row, I would always employ people for 11 months, and work 1 month alone. If the work would be impossible to do by 1 person alone, I would have a friend or a relative that would help me in that 1 critical month in a year, and then I would help them 1 month in a year. In other words, I would use exactly as much other people's work as possible without losing the land, and not a bit more.

Can I build a house on the land (and then I am no longer required to grow plants on it)? I would have a huge house. Most of it would probably be the minimum structure that legally qualifies as a house.

And I certainly wouldn't be the only one doing that. People would quickly notice and start doing the same thing.