Eh, I'd describe it more as a certain type of business model for running a school, one that's concerned first and foremost about maximizing profits. McDojos often end up teaching a watered-down program, because it's easier to do it that way and most people don't know better, but I wouldn't consider that a necessary feature of one.
There are certain hallmarks of a McDojo. A huge one that I see here is their instructor development program. It says, on the linked site, that basically anyone can become a Z Ultimate teacher, even if they're not a black belt and have no teaching experience, they just have to shell out some cash to take an instructor training course. That kind of approach, to be blunt, is I think a large part of how you end up with watered-down programs.