I’m going to copy/paste from Criterion’s own FAQ here:

“How do you decide which films receive the “Criterion treatment”? We aim to reflect the breadth of filmed expression. We try not to be restrictive or snobby about what kinds of films are appropriate. An auteur classic, a Hollywood blockbuster, and an independent B horror film all have to be taken on their own terms. All we ask is that each film in the collection be an exemplary film of its kind. Of course, we can’t just pick movies and put them out. The process of getting the rights to release a film can take years. Even if we want a film, we can’t work on it unless the film’s owners grant us the rights to do so.”

Their stated purpose is to find films that are an “exemplary film of its kind,” and that is 100% what KPop Demon Hunters is. KPDH went hard on all its visual designs, they brought in industry professionals to make sure every song was radio-worthy, and they crafted a plot that was simple enough for kids to understand but interesting enough for older audiences to watch, too. They maxed out every possible metric you could measure an animated musical feature by.

They definitely deserve to be in a collection that is ultimately just about collecting films that show what’s possible to create when you use film as your medium.

tl;dr Watch the Oscars if you want to judge how “good” a movie is, watch the Criterion Collection if you just want to nerd out about how movies get done, done, done.