The aliens in Mac and Me look terrible - truly, frighteningly terrible. But they definitely had some money spent on them - when you look at the assembled family in their matching rubber suits they obviously lack the sort of slapdash cheapness that you might see in a bad drive-in movie like Robot Monster, where the titular mechanical brute was clearly just a stock ape suit with a diving helmet on top. Furthermore, the filmmakers obviously had some time to do some pre-planning and some clean up after the fact because the aliens are a mixture of people in custom tailored suits, animatronic models, and animated models, and sometimes the live shots of the aliens are complimented by post-production special effects. If the problem wasn't lack of time and money - the most common problems with making a good alien - then what went wrong?
There probably isn't a simple explanation for why none of the more glaring design problems got caught in pre-production. All of the defects should have been obvious to any impartial observer: The coloring on the aliens is wrong - it's close to Caucasian skin tone but not quite there, which means their color can best be described as "testicular". Their eyes are way too big: if they were smaller it would be less obvious that their expression was so unchanging. The combination of weirdly large bellies and tiny arms and legs makes them look like starving children. (Also like E.T. knock offs.) The jowls on the sides of their mouths might look cute on a bulldog, but here they make you think that the rubber might be melting. They needed to put the aliens in some sort of clothing so they could avoid the question of genitals; creating a group that was both male and female but having them all be as smooth as Barbie Dolls makes them look weirder than they had to be. (Throwing a pink bow on the little girl didn't help.) The one design feature I don't mind is the ears - although Yoda did wear them better.
It doesn't help that the aliens weren't put in a good context to come across as charming. Steven Spielberg isn't insane, so when E.T. lands behind Elliott's house he spends a few minutes hiding, but the boy discovers the alien in short order and they waste no time bonding. Here, Mac stalks the family for a long time before making contact, and his creepily large eyes make him look super crazy while he's spying on a kid in a wheelchair. Don't believe me? Check this out:
In that shot Mac looks like Gollum, except less likeable, which is saying something, because Gollum was a murderous junkie who ate raw fish with his bare hands. (And while I'm speaking of junkies, I would be remiss if I didn't point out that whenever we see Mac's dad he's doing this weird head-nod thing, which combined with the fact that every member of Mac's family is super emaciated and that at one point they are all passed out on the floor of a cave creates a big heroin-vibe which is weird for a "kids" movie.)
Movies with taste this bad tend to be limited in their ability to execute their half-assed ideas, and the shoddiness of the overall package can sour whatever fun you might have had laughing at the film's goofier aspects. This film clearly had enough of a budget that it could go all in on it's nightmarish vision, which is great, because it means you don't have to sit through a bunch of time filling dialogue scenes while you're waiting for the weird alien stuff to start happening again. That also means that if you can't tolerate looking at it's unbelievably ill advised creatures this is not going to be a pleasant viewing experience for you, not at all. Personally, I liked the nonstop nuttiness, which kept surprising me in a way that a more consistently competent film wouldn't have. But of course if you don't have a stomach for dead-eyed skittle-eating testicle-colored junkie-aliens and you decide to stay away I won't blame you. After all, there's a reason why this is called "Mac and Me" and not "Mac and Everyone With Eyes."