Three qualities that DJs should strive for: flow, range, judgement.
Range is the ability to offer a variety of musical styles and sounds over the course of a set, similar to an actor who can play a wide range of characters. A DJ with range can offer different sounds during the course of an evening of dancing: big bands, groovy piano trios, vocals, instrumentals, New Orleans style, Chicago style, Harlem style, between 100 and 230 beats per minute, anything from Duke Ellington and Count Basie to Sam Cooke and Lou Rawls, Jumpin' at the Woodside to Wade in the Water. Not that all those styles would be hit in the course of a given evening, but a good DJ has the ability to go there if it is called for. And over the course of an hour set, he mixes up the style, tempo, and feel several times.
Range is particularly important at regular scene venues (as oppose to themed dances--if it's a 1920's Prohibition Party, then obviously you need to stick to that--and sometimes weekend events, where DJs sometimes get hired because they specialize in a particular style). At your regular event, range helps a DJ negotiate one of the great challenges of the job: varied taste. At many dances, there will be dancers who only know 6-count swing and dancers who want to swing-the-f-out, Big Bad Voodoo Daddy fans and Mouldy Figs, folks who want to balboa and folks who don't want to dance to anything faster than Shiny Stockings. You can't satisfy all of them. But you can try to entertain them all by playing a couple of songs that really fit with what one crowd wants, and then moving (flowing!) into a different taste range, and then giving a nod to the balboa crowd, and then making your way back to that first group again.
I should also add, varied taste applies not just across cliques of people, but within individuals as well. Most people get bored easily. They don't know enough balboa to do it all night, they don't have enough energy or spare t-shirts to charleston for two hours straight, they've memorized all the breaks on Gene Harris's Best of the Concord Years, and there are only so many ways they can think of to hit 1 and 4. So playing a range of music will keep them interested, challenged, and feeling like their dancing is fresh and fun, even if they only know 4 moves.