Before talking about the problems of a first draft, it's important to ask a couple of other questions.
- What is a first draft?
The answer is simple: the first written version of your novel.
- What does it look like?
That'll depend from writer to writer. If you first outline extensively and prepare settings and characters carefully, the first draft will probably be very close to the final work.
If you start writing and discover where the story leads step by step, it's very likely the characters (and the very events) will change a lot through the novel and, therefore, the first draft may look very different from the final work.
You may even start out with a fairly outlined idea and, half-way, decide you want to go somewhere else and give up that previously outlining (some people will advise to go back and rewrite; others will tell you to carry on and fix the beginning after you've reached the ending).
Some people will go as far as to advise that you write all the events as fast as possible (write, write, write, and don't stop to think). This type of first draft sounds to me very bare-bone and akin to an outline in prose.
Finally, we may ask...
3. What about the first draft is so bad?
Again, it will depend on what type of first draft you have in your hands.
If there was extensive outlining, it's probably safe to say you won't need to rewrite the entire thing as characters, events and settings will probably be set in stone.
If you discovered your characters and events as you wrote, you'll at least have to go back and make sure everything is coherent (so that, for example, one character didn't start out as a red-head and turned out to have auburn hair half-way).
If you changed your mind about what you're writing half-way and carried on, you'll need to go back and really remake that first draft.
If you write without thinking, then you'll need to go back and flesh out pretty much everything.
I believe that the more planned out in advance the novel is, the fewer problems you'll have with your first draft. In this case, it is my belief the problems will be with small incoherences and mostly style. (Unless, of course, the novel was poorly planned and the author couldn't choose, or focus on, the right events to advance the story and the characters in a tight, appropriate fashion.)
Discovering as you write, or changing your mind half-way, will get you more problems of coherence, whether it is with timelines (eg. one character being in London in the morning and in LA in the afternoon), characters (eg. Johnny is shy half of the novel and a shameless social butterfly the other half), settings (eg. Annie's bedroom has a view to the sea but is set six miles from the beach), plot holes of all types, or simply a lack of focus on a theme.
If you write without thinking, the problems I've mentioned in the previous paragraph become even stronger. Add to that that you probably had no time to flesh out rounded characters and may even have left the setting as a random American city and no idea which month it's set in, which means you'll have to choose a city and timeframe. Then, having done so, you will need to insert references to the appropriate climate (eg. if it's set in Anchorage, Alaska in December and you don't mention snow, there's something seriously wrong).
Then there is the personal tendency of the writer: a verbose writer will write too much, whether we're talking description, dialogues, or unnecessary events; a 'to-the-point' writer will write too little, whether it's because there'll be no description, the characters don't require back story or location names and months are considered superfluous for the crux of the story. For these writers, the first draft will be the place to let themselves go before going back and softening their instinctive approach.
On a personal note, I write in a fashion as I've never seen mentioned in most forums and blogs I visit. First of all, I don't 'first draft' my entire novel. I write the first few chapters a few times (or over and over, if need be) until I find the right tone (style, narration, etc) to fit the story and the characters.
Then I develop the main events, timeline them, research the settings, understand the motivations. At this time, I'll write random scenes that further flesh out the characters and may or may not be used in the novel.
Finally, I go back to that first chapter and start writing. I'll carefully search for the right words, the right style, the right rhetoric, the right everything- Every time I finish a chapter, I go back and re-read everything (in the beginning) or the last few chapters (once I get over half-way the novel) to make sure the tone is just right and everything is still tight and 'perfect'. If I start getting fed up, the chapter needs an over-haul. If something is wrong, it'll become annoyingly obvious after the third or fourth re-reading and I'll be able to fix the problem.
Some chapters do work like a first draft and will need a more or less deep revision; others will come out nearly perfect at the first try (barring some words that need to be swapped with a synonym or some wordings that need perfecting).
My advance is slow but steady and confident.
Why do I refer my personal 'draft quirks'? Because I want to reinforce that it depends. Whether a first draft is great or terrible; whether the problem is character development, fleshing a setting (too much or too little) or catastrofic plot holes; whether there is a proper novel draft or consecutive chapter drafts - what is wrong will always depend on each individual draft rather than a generalisation.