Judgement is the ability to evaluate how others will perceive the music you play. When you try to flow from Kid Ory to the Preservation Hall Jazz Band, will that transition be perceived as smooth or jarring? When you try to broaden your range by playing both Charlie Barnet and Mills Blue Rhythm Band, will the tracks you pick be recognized as different and varied, or instead just be taken as "more scratchy old big band"?
Judgement can be particularly challenging for DJs because on the whole they have more knowledge, more developed taste, and more specific interests than their audience. They hear the difference between a 1929 Jabbo Smith recording and a 1937 Louis Armstrong track. They appreciate a track because of the great Coleman Hawkins solo in the middle of it, whereas most of the people dancing probably didn't even notice that it was a saxophone. And oftentimes, a DJ's taste in music extends far beyond the subset that is good for swing dancing. Judgement involves moderating one's own passions and understanding the tastes of your audience. It is an exercise in musical empathy.