Generally the players who use the word, overuse it and will call somebody a bad kid about 13 times in one sentence. This can range from jeasouly to just plain stupidity. What motivates them to say it is still a mystery. Scientists believe it makes them feel better that they fail in life. They think they are god's gift to gaming when in all reality, they themselves are the bad kid.
Please see the word Noob if you're looking for a broader meaning of the term.
Player 2: STFU bad kid!
"Andrew, quit being such a bad kid!"