I'd say evilness has to do with the character's
motivation for being evil. That's also an integral factor in whether they're a well-developed character or not.
Some villains are evil 'just because'; they try to destroy the world because they can, or because they're bored. This is utterly meaningless to me; all it says is that the writers were too lazy to give the villain a proper story, and instead just wanted a villain to threaten the world.
A lot of villains have a vague, twisted sense of wanting the world to be a better place in some way. Even Sauron (from Tolkien's works) was carrying on Morgoth's plans to make the world, and life itself, a stable and regulated process.
Going back to the rather silly argument that prompted this thread in the first place...
To me, Kefka is a fairly weak villain. Sure, he was
evil and
insane and
hate hate hated everything, but there was very little method to his madness. He wanted power because he was crazy. He became a godlike entity, then decided he had to destroy the world for little reason except that the plot required a threat to the world in order for the heroes to have something to fight against. In plenty of debates about Kefka's
meaning as a character, all that can be offerd by some debaters is that he "represents the evil in all of us".
Sephiroth, on the other hand, has a fairly involved past, with layers of betrayal and deceit that turned him against the world. Combining the strongest and worst aspects of two species, his plan to cripple the world would grant him absolute power over all life - something he earnestly believed was his rightful place, though his reasons for that belief changed over time. Unfortunately, a lot of Sephiroth's more... shallow fans are drawn to the style over the substance, which can lead to the impression that he's only popular because of omg teh hawt bishie uber SORD!!! or somesuch.
I like the characters of Kefka and Sephiroth. They're both powerful figures who drive the plots of their respective games. But Sephiroth's motivations set him apart, to me, as a character with more conscious malice, a more genuine willingness to destroy in order to achieve his ends. Mindless destruction is scary and upsetting, but deliberate and purposeful destruction instills a broader range of stronger emotions.