Biphasic catalysis enables the effective recycling of homogeneous catalysts by their immobilization in an additional liquid phase immiscible with the products. The introduced liquid− liquid interfacial area implies mass transfer limitations that play an important role in understanding these catalytic systems, with many rate enhancement strategies revolving around optimizing said area. In this contribution, the relationship between liquid−liquid interfacial area and catalytic activity is elucidated by applying a methodology that utilizes an image-based in situ measurement of the transient droplet size distribution. When the industrially highly relevant aqueous biphasic hydroformylation of the long-chain olefin 1-octene is taken as the model reaction, it is found that the product nonanal and the addition of the ligand increases the interfacial area by a factor of up to 5. The rate of conversion is found to depend on the stirring speed. By variation of the catalyst concentration, it is shown that an accumulation of the catalyst species at the interface is unlikely. Using a mathematical model, it is highlighted that the effect of the aqueous−organic interfacial area on the catalytic activity is not linear as was previously assumed in the literature. Instead, a change in the interfacial composition is proposed that causes a shift in the dependence of catalytic activity on said area. Thus, the dynamic physical properties of a lean gas−liquid−liquid system were linked to the catalytic performance of the system.