You can read a description from Dizpins.com:
http://www.dizpins.com/pinventory/scrappers.htm
Basically a scrapper is a pin that looks legitimate, but is not. It can be a factory overrun (i.e., the factory was contracted to make 1 million, but they made 1.1 million instead) or a pin that has some kind of error that should have been "scrapped". You'll often be able to tell a scrapper because the colors are weird/off or the back stamp (the copy right) is wrong/missing/damaged. Others say you can tell because they feel "rough" or the edges are sharp/pronounced. Sadly, there is no sure fire way to tell a scrapper.
The general rule of thumb is that you buy a "lot" of pins (e.g., 25-pins) for less than a couple of dollars each, you're likely buying scrappers. Also, if you buy pins that come in little baggies (instead of pin cards like the ones you see at the stores in WDW/DLR), those are more likely to be scrappers as well. So, unless you only buy from Disney directly, it is hard to say whether you'll get scrappers or not.
It's worth noting that if you do end up trading with CM, the CM lanyards tend to be filled with scrappers. So if you really dislike scrappers, I would avoid trading with CMs. That's the crux of the argument: those that dislike scrappers feel they cheapen the trading and make it not worthwhile. Those that don't care, tend to say that they like the pin, so it doesn't really matter if it's a scrapper or not (they also say that if you can't tell, does it really matter?).