It's dicey. Handmade in Etsy terms can mean as little as altering a commercial item by splashing it with pain, or as much as making a silver bracelet entirely from sheet metal.
The line is blurred by the fact that they allow vintage items (defined as 20 years old or more - clearly something decided by 23 year olds) and mass produced craft supplies in their own sections, which has always been a source of confusion and friction. The CEO/founder blamed this on 'Leah from Craftster' in an interview, saying she picked the categories.
Other than that, it's not juried in anyway which is think is good. BUT, they do sometimes interrogate sellers about whether their items qualify, and come to incorrect and poorly supported conclusions about whether people are allowed. Etsy has has a long history of closing people's shops suddenly with no accountability or recourse... it's really inconsistent, too. Really inconsistent. Check out http://www.etsybitch.com for some recent horror stories.
AFAICT, there's not much line-drawing happening. In terms of handmade vs retail, I've seen people essentially buy retail items, paint a little something on it, then sell the "customized" items... but it doesn't seem like it hurts Etsy much for people to do that.
And in terms of controlling quality, there definitely isn't much...
In some cases, that goes for safety as well. My wife (a EE) noticed that there are a lot of sellers on Etsy selling jewelry made from recycled printed circuit boards (earrings, necklaces, bracelets, etc). Unfortunately, a lot of the sellers don't know that PCBs are full of heavy metals that should not be exposed to the skin without some sort of varnish coating. Especially since some sellers like to remove components and sand the boards down so they look cooler.
The line is blurred by the fact that they allow vintage items (defined as 20 years old or more - clearly something decided by 23 year olds) and mass produced craft supplies in their own sections, which has always been a source of confusion and friction. The CEO/founder blamed this on 'Leah from Craftster' in an interview, saying she picked the categories.
Other than that, it's not juried in anyway which is think is good. BUT, they do sometimes interrogate sellers about whether their items qualify, and come to incorrect and poorly supported conclusions about whether people are allowed. Etsy has has a long history of closing people's shops suddenly with no accountability or recourse... it's really inconsistent, too. Really inconsistent. Check out http://www.etsybitch.com for some recent horror stories.