First of all, I'd appreciate it if you asked this in the Q&A thread that's been stickied in this community tab (and I may migrate your question and my answer to that thread), but I don't mind answering it here since it's a really good question!
The main answer (which may seem perhaps a little too general) is what makes a bad game "a bad game" is entirely up to your interpretation. What makes a game good or bad is subjective since it can depend on what your personal standards of what good or bad games are. Like does the game have frustrating controls when it doesn't need it to be frustrating? Is it badly written and/or have a nonsensical storyline full of plotholes? Does the decisions made for its narrative and gameplay just not make sense? Some devs will interpret a bad game by making something incredibly low effort (drawn quickly/poorly with typos everywhere), and some will interpret a bad game as something incredibly annoying to experience with buttons that don't work or text that's too slow. Some will interpret it by making parody or joke games of a popular concept, or sometimes even make fun of a genre they actually love! Also sometimes it's fun to be annoying to the player lol. I suggest playing some of the previous jam's entries to get an idea!
I'll also give you my reason why I like running this jam and hope to keep it running every year, which hopefully will be a more succinct answer lol. The modern internet as it is currently is incredibly tough for a creative in any medium because of how frequently and constantly you have to make and post good art in order to tide over algorithms and to get your work looked at. This is absolutely unsustainable because one person can't just keep making perfect bangers all the time, and to think that you need to can lead to either an endless perfectionist feedback loop ("I'll publish this when I get better at it") or worse, burnout and self worth issues ("Nothing I make will ever be good"). Alongside resting, sometimes you need to make some bad art in order to make way to get you to make some good art, but the modern internet has made it so that people are incredibly scared to be bad or mid at not only their first attempt at a medium, but several attempts after their first!
My central hopes for this jam is to make some space and give people permission to not be pressured to make something good, and to let loose and just have fun making the thing. Anyone can use this jam to their personal creative advantage, whether its an experimental design that's hard to pull off in a typical game, your first foray into an engine you've never worked with (like me, I'm using the jam as an excuse to learn Godot!), learning your own workflow to help you figure out how to finish your games in general, or just because you like the creation process and wanna make a(n un)playable shitpost.
The definition of what makes a game "good" or "bad" is subjective so what's allowed in is honestly pretty lax, but the main central theme of the jam is to not worry about the pressures of making something good and have to fun making bad art. Anything is allowed provided you follow the jam's rules and have fun making your bad visual novel! :D