I bet this is why they say "The weather is beautiful." for "Il fait beau." In English, we can say "It is beautiful." and we understand that unless we were just talking about something, that this might be about the weather, but we don't just say "It is bad." for the weather. We usually have to put weather into the sentence. "It is bad weather." was also accepted as correct. We can say "It is raining." or "It is cloudy." or something else that describes the bad weather more specifically.
The programming thinks that a noun with an apostrophe and an ‘s’ is a possessive form. You can spell out the verb “is” for Duolingo. It is not so very long. You are not really saving much time that way anyway. You might find sometimes that you can get away with it on a pronoun since the possessive forms are different, but that contraction may need to be added at each individual exercise.
Literally, it is “it makes bad.” or “it does bad.” Remember that « il » can mean “it” also.
This is an expression and “it” stands for the weather.
The expression in English would be “It is bad weather.” or “The weather is bad.”, or “It is bad outside.” and some people say “It is bad out.” If you just say, “It is bad.”, it might not be about the weather. There are plenty of other things that could be bad.
Faire can mean “to do” or “to make”, so there are many, many expressions with this verb.
It is the way the French expression is designed. It is a conjugation of the verb « faire » which means “to make” or “to do”. There are many, many expressions that use this verb in French. One of its many uses is meteorological, or to indicate weather. See the link I provided above.
All definitions of a particular word are not the best fit for every sentence. In this case, we are specifically talking about the weather. “The weather is bad.” is the best translation for this “Il fait mauvais.” and they also accept “It is bad out” as correct also. I have not seen “It is bad.” for this sentence, because that might not be about the weather.