What Are they? The Domain Which Not Renewd or Forgot to Renew by the owner How can you tell? Check Whois, and check Registar Changes, etc and Archive.org why are they bad? In my Humble Opinion they are not bad, they have expired traffic
They can be bad if they've previously been banned from Google search results or Adsense do to TOS violations. Obviously the fact that they were dropped is an indication that someone didn't think it was worth the registration fee (or just didn't care enough), but I've bought a couple and developed them without any problems yet.
I've found a few gems in terms of dropped domains, but I haven't really seen many worthwhile ones.IMHO, if you think you can develop one, then the status of it being dropped is irrelevant (unless it's blacklisted)