Bad Assets issues occur in multiplayer when a client's game files do not match the host. This safeguard was put in place early-on in Battlezone II's development to replace the Version Mismatch system used in Battlezone, which helped to prevent cheating through modifying game files (giving Scouts Blast Cannons, for example, or unlimited health).
The system's drawback came in that it only checked the client's assets as they joined the match, leaving the game vulnerable to exploitation through memory address editing, allowing the client to modify content loaded to memory while the game was in progress. This practice never became commonplace, as it frequently introduced instability to the game. The 1.3 Patch introduced safeguards against this regardless.