"It is bad."
In Japan, it's rude to bluntly say "that's wrong" or "you're wrong," so instead people say ちがうmeaning "your answer/this situation/etc. is different (from the right or expected one)" the part in the parenthesis is implied to save face.
When you use わるい you are bluntly saying "this is bad," which is sometimes warranted, but is usually just considered rude. わるい is more often used to describe things that are objectively bad, or at least something that won't embarrass anyone. You can say crime is わるい or the smell of poop is わるい, but even if it's true, you'd never say someone's cooking or accent or job performance or test scores or anything that might embarrass someone is わるい, even if you're talking about yourself. Instead, there are a lot of words and phrases to describe the "badness," in a way that is socially acceptable. ちがうis one of them, and I'm sure there will be more in future lessons.