I think it's generally pretty shaky ground when people harp on about a performance being bad, because we can never know what the actor* was going for or what they had been directed to do. I used to be exactly like you toonfool and just not get the bad acting thing (except when it was deliberately bad - like Dean Lerner in Darkplace - which is a skill all of its own).
However, I came up with my own formulation of bad acting which I feel is better than complete relativism but also doesn't inhabit the snide negativity of herd opinion about what is bad acting (usually people are grossly unfair about it).
Firstly, you need to view a single actor across a range of performances, and make sure you get a good sample of them when they're not being type cast. It is usually the case for many actors who are - IMO unfairly - classed as "bad" actors that they are just being recast as essentially the same character again and again and it's not really their fault.
When you do this, you can start to see the signs of a "bad" actor. I believe there are two and only two such signs:
1.) The actor recycles mannerisms across roles to the extent of completely shattering the illusion that their character is an individual within a specific scenario. (e.g. Keanu Reeves looking faintly confused, Richard Gere sighing and nodding his head to the ground, Keira Knightley repeating that unique teeth-gnashing smile in every role she plays.)
2.) The actor "slips out of character" continually throughout a performance, again shattering the illusion of a consistent individual. (e.g. "forgetting" that they are supposed to be from a particular part of the world and reverting to a native accent or showing a blank expression when they should be reacting to the other characters around them.)
I completely stand by my point about only being able to say for sure that an actor is "bad" by studying them over a range of performances, because no matter how "bad" or "unbelievable" or "paper thin" the performance appears, you can't be sure from just the one that it's not exactly what the actor intended and had been instructed to do. Once you see more though, it becomes obviously pretty quickly whether the actor has skill or not.
*using the Guardian convention of "actor = male (actor) or female (actress)".