I think you mixed up worse is better. The idea behind the phrase is that quality does not increase with functionality. Functionality often means features along with bells and whistles. Sure that application looks pretty and offers tons of features but with that complexity and glut comes a steeper learning curve as well as possible security and stability issues in the code (more bugs).
A good comparison would be comparing using make files and a simple text editor like vim to visual studio. Is visual studio truly better because it offers more features when a make file and vim can do much the same? A programmer used to VS might call the make file method worse, but the reality is that it is the simpler path which makes it better. Realize that simple doesn't mean "simple to use" but simple in terms of complexity (philosophical simplicity is at play here).
Worse is better is better translated as "A simple design is better, but not from the users perspective."
I'm talking about these two points from the paper, regarding the "Worse is Better" philosophy:
> Simplicity -- the design must be simple, both in implementation and interface. It is more important for the implementation to be simple than the interface. Simplicity is the most important consideration in a design.
> Correctness -- the design must be correct in all observable aspects. It is slightly better to be simple than correct.
Dropbox is simple in implementation, at the cost of simplicity in the interface and correctness. E.g. it is simpler to simply punt on locked files in Windows. Tell the user to quit Word if they want their file to sync, instead of handling file locking at the protocol level. Likewise, it's simpler to detect changed files after the fact than write a filesystem driver to knows what blocks are changed. But it degrades the user experience (their computer burns clock cycles re-figuring-out information a real filesystem driver would've had).
The upside of all that is that Dropbox was simple to implement, simple to port, and simple to deploy, which made it popular:
> Therefore, the worse-is-better software first will gain acceptance, second will condition its users to expect less, and third will be improved to a point that is almost the right thing.
A good comparison would be comparing using make files and a simple text editor like vim to visual studio. Is visual studio truly better because it offers more features when a make file and vim can do much the same? A programmer used to VS might call the make file method worse, but the reality is that it is the simpler path which makes it better. Realize that simple doesn't mean "simple to use" but simple in terms of complexity (philosophical simplicity is at play here).
Worse is better is better translated as "A simple design is better, but not from the users perspective."