Long post, but I think I know where tumblr's uglification art trend at least partially came from.
Back when the homestuck fandom was at its biggest on tumblr around 2010, pretty much all fanart of the characters was typical normal looking fanart that made all of the characters look cute/attractive. There was one specific artist named Phemiec who started something called 'uglystuck', drawing characters looking deliberately ugly and particularly making the trolls look like actual aliens or what you'd expect a 'troll' to look like.
They look ugly and nothing like they look in canon, but that's the point. Instead of trying to say that these versions of the characters were actually beautiful and you're a racist/ableist/whatever if you don't find them beautiful, she
wanted them to look like grotesque caricatures to go against the popular anime style art of most homestuck art at the time.
This whole spiel sounds like everyone in this thread crying about people hating their 'diverse and daring' art nowadays, but it was actually a controversial opinion in 2011 when everyone drew the same anime or disney knockoff fanart. I think the key difference here is she acknowledges that her art pushes these features to their "extremes" rather than trying to be realistic, and she
wants it to provoke a disgusted reaction.
What I think happened is that people took the wrong idea from what she was doing and started equating diversity to these purposefully extremely exaggerated over the top features. So now everyone's drawing hairy fat scarred people but without the intentional gross-out factor and saying 'but that's how real people look!', when her art was meant to be parodying and caricatured.