Is "Battery Health" status real?

Hello,
I know this will sound like noob question, but is "Battery Health" status real? does it go from “good” to “bad” when the battery is bad or swollen?
The "Battery Health" status are seen in some apps and from dial *#*#4636#*#* -> “Battery information”
I'm just curious about that "Battery Health" status...

https://img.xda-cdn.com/KfNs6FoUhKUSnKhYx1ZTFoG2Mog=/http%3A%2F%2Fwww.howtogeek.com%2Fwp-content%2Fuploads%2F2015%2F05%2Fximg_55515a9114e45.png.pagespeed.gp%2Bjp%2Bjw%2Bpj%2Bjs%2Brj%2Brp%2Brw%2Bri%2Bcp%2Bmd.ic.TKcdgXyGVm.png

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