Is it bad when a kitten sneezes?

Not much - mucus may be expelled and the kitten should go on and be fine. This is likely similar to when you sneeze while dusting the top shelf of a bookcase - your nose became irritated, you sneezed, life went on.

However, if your kitten is constantly sneezing, has watery eyes or otherwise appears sick, you may want to make an appointment with your veterinarian. Most feline upper respiratory tract infections are viral, so there is no treatment, but your veterinarian can check for other causes (maybe a small piece of something stuck in the nose, etc.) and explain what the likely outcome of this will be.

Most kittens get over URTI on their own with no medication, but some will become "chronic snufflers" due to a change in the shape of their nasal passages. If this happens, you may have a sneezing cat, but otherwise it should be relatively normal.