The Jargon File (version 4.4.7, 29 Dec 2003):

brain-damaged
 adj.

    1. [common; generalization of ?Honeywell Brain Damage? (HBD), a theoretical
    disease invented to explain certain utter cretinisms in Honeywell Multics
    ] adj. Obviously wrong; cretinous; demented. There is an implication
    that the person responsible must have suffered brain damage, because he
    should have known better. Calling something brain-damaged is really bad; it
    also implies it is unusable, and that its failure to work is due to poor
    design rather than some accident. ?Only six monocase characters per file
    name? Now that's brain-damaged!?

    2. [esp. in the Mac world] May refer to free demonstration software that
    has been deliberately crippled in some way so as not to compete with the
    product it is intended to sell. Syn. crippleware.


The Free On-line Dictionary of Computing (30 December 2018):

brain-damaged

   1. [generalisation of "Honeywell Brain Damage" (HBD), a
   theoretical disease invented to explain certain utter
   cretinisms in Honeywell Multics] Obviously wrong; cretinous;
   demented.

   There is an implication that the person responsible must have
   suffered brain damage, because he should have known better.
   Calling something brain-damaged is really bad; it also implies
   it is unusable, and that its failure to work is due to poor
   design rather than some accident.  "Only six monocase
   characters per file name?  Now *that's* brain-damaged!"

   2. [especially in the Mac world] May refer to free
   demonstration software that has been deliberately crippled in
   some way so as not to compete with the commercial product it
   is intended to sell.  Synonym crippleware.

   [Jargon File]

   (2011-01-04)