It literally translates to : "not as bad as i thought" You can use it in the exact same situation and context as you would in the English language. It's neither formal nor casual so it won't offend anyone.

I think in english, this sentense means "this is better than what I thought". when you meet something happened, but no resault, maybe you think the resault of this thing is very bad. but when the resault comes out, you find that "it is not that bad" "it is better than what you thought" now you can say "没有想得那么糟"

不就是" not so bad..“嘛 一般是用在：你对一件事情,已经不抱什么好的期望了。可是发生以后呢 ，你发现也不是特别糟糕。

It isn't as bad as anticipated-----good answer

isn't as bad as was thought