Well, having asked similar questions myself, it seems they make this determination based on the reports of the cat's behavior by the previous owners, and/or observing the cat's behavior in the shelter. Both are notoriously unreliable, in my opinion. I agree with your observation about cats' social interactions. You can't really know for sure without bringing the cat home. I think there are members here who have adopted cats labelled as such and successfully brought them into a multi-cat household. I hope they'll read this thread and comment.
The undesirable behaviors are aggression (fighting, biting, clawing) both toward other animals and toward people, and excessive fear (defensive aggression, hiding.) Basically behaviors that make them unsuitable for interacting with other animals in the household.