Badware includes many types of software which can hurt you or your computer. It can include viruses, trojans, spyware, worms, adware, rootkits, and other types of malicious and unwanted software that take away your choice about how your computer or network connection is used. Some badware is disguised as legitimate software - for example a browser toolbar that tracks your browsing history without informing you. This software may or may not be maliciously developed, but nonetheless robs you of your ability to decide how your computer or your personal information is being used.
Badware websites facilitate the distribution of badware intentionally or otherwise. To research whether a website has been reported as having badware, an excellent resource is the Badware Website Clearinghouse at StopBadware - a non-profit dedicated to eliminating viruses, spyware, and other badware. To report a website with badware you can review it on Sitejabber but also report it to StopBadware.