If I understand it correctly, it’s the use of negative framing of another person’s physical attributes or demeanor, constructed in the hope the receiver of the “negging” has low enough self-esteem to agree with the assessment and will assume the asshole is a person of higher intrinsic worth.

There might be more to it, but I usually just think of it as a form of reverse psychology + emotional abuse.

you're supposed to subtletly say or imply negative worth to the other person to manipulate them into wanting to please or be praised by you, it's very gross.