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I was given "fuffa" as translation for "fluff" and then while double-checking it using Google translator, I was shocked that it showed me "fuffa" as "crap".

The context it was used was:

Ultimately, it’s difficult to separate the fluff

Infine, è difficile separare la fuffa

By the way, is "fuffa" a bad word? (una parolaccia?)

The translation of fuffa as fluff is correct,
it is the typical unaesthetic fluff (or lanugine in Italian) that forms on cloth and that is generally removed.

Moreover it is not considered a bad word at all but just a colloquial term.

The term is also used figuratively to indicate something which is in excess and consequently useless, with no consistency.

In a document, for example, the fuffa is a large amount of words that are written just to increase its length, without adding relevant content or information to it.

In an informal or colloquial context we use the term fuffarolo to describe an expert of something that cannot be precisely described, someone who’s capable to say a lot of words without saying nothing.

@abarisone gave you a good answer (though I never heard the word fuffarolo, maybe it’s regional). I want to add that fuffa is not a bad word and you can use it in any context (of course if you told someone all you’re saying is fuffa, he/she may not take it too well)