My definition of "bad graphics" is when graphics don't properly represent something.
The most clear-cut example of something like that is probably Dwarf Fortress. Now before anyone picks up pitchforks and heads this way, the first thing that came to your mind is wrong.
For example, in Dwarf Fortress, an E could be:
1:An Elf
2:An Ettin
3:An Elephant
4:A Giant Eagle
5:A Titan
6:A Forgotten Beast
7:A Zombie Elephant
8:A Skeletal Elephant
9:A Demon
As far as I know, that's it. You can *not* tell which one it is just by looking at it, you have to pause the game to investigate, or have kept track of where it originated from.
Of course, there's a fairly easy fix for that, there are graphical packs that change everything to tiny sprites and such that make it clear what you're looking at.
Edit: Another extreme example of this is The Elder Scrolls: Arena. You literally can not see more than 5 feet in any direction, the rest is all fog. It makes navigating anything next to impossible, because there is no way to keep any sort of landmark in view unless you are going next door.