Evil is a term that can be used very loosely and can mean different things based on the context. What is generally the case is evil things are negative. Based in some kind of supernatural or biblical setting, if something is referred to as being evil, it means that it is dark and scary. Something evil is generally out to destroy and cause damage.
Evil is a common theme in video games. Be it Nazis, zombies or any other kinds of supernatural monsters. Horror games often make great use of evil settings to frighten the player to create a truly thrilling experience
