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Out-of-focus highlights such as that seen below make good bokeh. The light intensity is greatest at the centre of the circle, and fades towards an indefinable circumference. The blur is almost Gaussian and the consequence of poor spherical aberration characteristics. This is a rare case where less-than-ideal optical engineering may produce the best result!

 

Good bokeh

 

Bad bokeh arises from out-of-focus highlights having well-defined outer edges as in the image below. When these are combined the edges tend to give rise to a perception of detail or texture in areas of images that are supposed to be soft.

 

Bad Bokeh