These are pins with flaws that are more obvious. Faults may include:
small areas of missing enamel
moderately scratched or nicked enamel or metal
small gouges in the enamel or metal
missing plating or flaking plating
Bag grade pins should be used with locking backs. These are intended to be worn on bags and backpacks, so it is important that they don't fall off. Since they aren't perfect, these are the best option for people who enjoy showing off their pins without spending as much.