"Are 'content farms' necessarily a bad thing?"
Yes I think they are because once money or personal gain enters the equation then everything else becomes skewed by it. Content farms are financed and motivated by advertising, which is never the whole truth, so everything that supports advertising goes down one or more notches, entering the realm of poor content. In my estimation most of the content online is pure dross and very few sites are providing wholesome good content, if only because they support advertising, which is never the whole truth.
"Which ones are you thinking of?"
The biggest dross provider of all is G00GLE its self and also the biggest content farm of them all, who doesn't pay anybody for the vast amounts of content stored inside it's data base. In fact, not G00GLE or any of the other so called search engines are actually search engines at all but data bases that can be searched. This also means that they are censorship's because they decide what is worthy of your attention and skew the results in favor of themselves for the purpose of generating advertising revenues.
Very smelly dictatorships that demand you don't do what they do, only what they tell you to do.
These are also secret organizations that are not open and up front about anything, even when they tell you what they want you to do they are not clear.
They try to insist on providing the best content but that is not possible because there are 7 Billion People (2013) in this world all with their own definition of what is the best, which one of them is right?
Surely it's not those with something to gain.
"Many sites have been labelled as 'content farms'."
Yes and there are many more that are but haven't been labeled as such.
"Is this designation fair to the site, or do they provide a service for the writing community?"
I don't think many websites provide anything of real substance because they are influenced by traffic, advertising and money but not facts.
In fact the only one that gets anywhere close to providing good factual content really is the 5th biggest so called search engine online and doesn't support advertising or incentive through cash.
In fact they do provide something very valuable to the world please see below.
I am sure that people will point out that I am wrong about this because they are forced to be incentivized by cash. Honesty is the preferred human policy but they don't like the truth.