The empty lines (or <tt>\par</tt>) after each description
(here notation) are necessary.
The result looks like this:
<context>
\definedescription[notation][
headstyle=bold,style=normal,align=left,location=hanging,
width=broad,margin=1cm]
\starttext
\notation{A very very very very long item}
bla bla bla bla bla bla bla bla bla bla bla bla bla bla bla
bla bla bla bla bla bla bla bla bla bla bla bla bla bla bla
bla bla bla bla
\notation{i}
bla bla bla bla bla bla bla bla bla bla bla bla bla bla bla
bla bla bla bla bla bla bla bla bla bla bla bla bla bla bla
bla bla bla bla
\stoptext
</context>
<b>Hint:</b> This solution uses the <tt>distance=</tt><i>dimension</i>