There are lots of different terms used to describe audio, sounds, and mixes. I want to explain the difference between a tight recording and a muddy recording. Extreme cases of both can be a bad thing. You generally want to have a tight recording with just a little bit of leakage to add character. When recording you are trying to create a certain mood or atmosphere that your audience can relate too, and you can use a little leakage to change that mood.
Tight Recordings
Most sound engineers are usually trying to get a tight sound. What is a tight sound? When you are engineering sound, the more isolated a sound is, the tighter it becomes. If you are recording a guitar in a closed, sound dampened room, the sound is going to be very tight. The guitar will be the only thing recorded onto the audio track. The more padding and sound proofing there is in the room, will cause the sound to become even tighter. You have now completely isolated the guitar recording and eliminated all outside sounds. This would be a very clean recording and give you lots of control over the guitar in a mix.
The down side to eliminating everything, is that it takes all the character out of the sound. Every room has a certain tone that is created by the size and shape of the room, which is called reverb. You want to keep this in your tracks because it helps the mix to sound more natural and pleasing. If all the room tone, outside noises, leakage, were taken out of every track in your mix; the result would be vary alien and unsettling.
Muddy Recordings
Muddy recordings are the opposite of being tight. Each track is not isolated very well and there is a lot of leakage from one microphone to another. Muddy recordings are hard to control and artifacts can be herd when adding effects onto a track. Allowing a small amount of leakage into a recording is okay, especially if you a wanting to have more of a live, or garage band sound. just remember that more more leakage you allow, the less control you will have when using tools like EQ, compressions, reverb and more.