I would certainly include competence as contributing to a strong character
Or worse, because bad times create broken people. And while broken people can stand adversity, they are much less able to create something non-broken.
Also, whether hardships makes or breaks you depends largely on your outlook and coping skills (this comes from someone who's had CPTSD and had to stop suicidal idealisation and learn coping skills in my late 20s).
All skills diminish, if unused. Having too easy times means there's less need to "cope"
It's very likely most millennials have poor coping skills due to the predominantly emotionally neglectful parenting styles the previous generation
When people say that phrase today, "bad" literally means WWII.
I think that in apocalyptically bad times good people (the "weak") get taken advantage of by ruthless assholes (the "strong") who do better when they act like selfish monsters, but those kinds of people just prolong the bad times. The "strong" just endlessly fight amongst themselves while oppressing everyone else. "Might makes right" doesn't result in favorable outcomes.
Good times allow (and insist) that folks behave like a civilized people who look out for each other and that not only helps promote future good times and advancement but also creates an environment where genuinely vulnerable people who couldn't survive the bad times can thrive and contribute. When people are fighting for survival they don't have time to invent new cool things and learn about how the universe works.
I guess after a while the good times allow some of us to get annoyed by all the good people who keep telling everyone we have to be nice to others and to look around at all the vulnerable people who couldn't survive without our support and wonder if we'd just be better off without them, but I can't imagine that working out better in the long term.
Perhaps things play out somewhat the same in less than apocalyptically bad times too.
"Hard times create strong men" - maybe, but starvation doesn't make you strong. Being dead from disease doesn't make you strong. Rising to adversity might make some people stronger, but it will harm others who survive but are damaged. It could be that the already-strong people rise to adversity and the weak get crushed by it, Darwinianly? Or that the weak endure through hard times as much as anyone because hard times are generally about health food or money and even 'weak' beggers can get enough of those to survive. Today's homeless are generally enduring lack of food, poor health, low money, and nobody considers them being made 'strong' by it, they're harmed by it.
"strong men create good times" - warriors are strong, barbarian raiders were strong, unpleasant bosses who abuse their workforce and reign by terror are strong, those are horrible times. Is there a connection between strong people and good times? What about average people who are neither weak nor strong, working in concert? What about people who are generally considered weak, but are thinking long term planting the trees that will shade tomorrow, community building, etc?
"good times create weak men" - do they? Do they necessarily? Why is this framing "good" as "bad"? Wouldn't going to the gym regularly and getting stronger be "good times" for someone? Wouldn't working the family farm hard, being physically strong and providing for your family, be good times and not making you weak? Is it luxury which makes people weak - previous point, do strong people create luxury specifically?
"weak men create hard times" - do they? Plenty of strong people (dictators, for example) have created hard times for millions. Plenty of weak people have had no impact on the times at all. Isn't the history of progress littered with people who were "a weak and sickly child" who spent their lives hiding indoors, thinking about math, died young, and changed the world - were they making hard times?
It's connected to the 'one generation makes family wealth by working hard, next generation preserves it but can't build it, next generation spends it'. In that, the hard times are where you have no money and have to work. The good times are where you have money and no work. The next hard times are where you lose the money and have to work again. But then, getting back into work and earning money is a homeless unemployed person's good times, life on the up.
At the 'level of civilizations' it's far too vague to say the fall of Rome was caused by "weak men" or that the rise of Rome was caused by "hard times".