Nothing is wrong with settling, people do it all the time. It just depends on the context of it, I'll start off with a extreme example.
1) You and a group of 30 people win a large sum of money ( a million a piece ) , you get the option to settle with the cut you've won or put you name in a hat and win all of it (30 million). You don't know how many other people have taken this option or not....do you settle with 1 million or go for more?
2) You need a car to get back and forth to work, someone is selling a used corolla that's dented up but reliable. Buying this car guarantees you can get to work everyday but puts you back years on getting you dream car. Do you settle?
People have a problem settling when they dont respect what they have currently or the situation they are in currently. If you are a big dreamer, have plans and ideal's then its nothing wrong with not settling until you get to those goals or plans. But if you want a woman or a man thats a 10, that's going to take care of you and your kids, cook, clean, cut grass, change the oil, have amazing sexy, agree with everything you say or do... you are going to be waiting a long time. And you will settle unless you plan on dating for months at a time for the rest of your life.
There are some things such as morals, and standards that you shouldn't settle on. Everything else there is absolutely nothing wrong with settling, if settling makes you happy or content. If you settling on something or for someone and it annoys you or brings very little if any joy to your life..then you messed up.