While there are breed variations and some seem to have a skin that's oilier than most, actual bad smell is a sign that something is wrong. As in humans, it is usually due to poor hygiene, with poor oral health being the biggest culprit (dogs use the mouth to scratch, remove things from fur, lick themselves, etc).

Skin conditions are rather common, some can smell really bad. Even if it is something as benign as whatever the dog acne equivalent is.

Localized smell usually means the dog found something interesting, to his sense of smell, and rubbed itself on it.

Of course, some owners are just too lazy to bathe their dogs, even once a month.

Not all dogs are like that, of course