What is evil? Why would God create evil in the world at all? I've engaged in conversation on this issue many times and I've found that a lot of confusion exists on even what we mean when we say something is evil. There's a clip at the end of Time Bandits where the Supreme Being has cooked the personified Evil to a crisp. He says of the charred remains, "Do be careful! Don't lose any of that stuff, that's concentrated evil!"
That's how a lot of people think of evil—as a thing in itself that stands in contrast to good. The Yin and Yang symbol represents such a view, showing how good and evil are necessary for each other's' existence.
However, this view is incorrect as the church father Augustine has argued:
All of nature, therefore, is good, since the Creator of all nature is supremely good. But nature is not supremely and immutably good as is the Creator of it. Thus the good in created things can be diminished and augmented. For good to be diminished is evil; still, however much it is diminished, something must remain of its original nature as long as it exists at all. For no matter what kind or however insignificant a thing may be, the good which is its "nature" cannot be destroyed without the thing itself being destroyed. There is good reason, therefore, to praise an uncorrupted thing, and if it were indeed an incorruptible thing which could not be destroyed, it would doubtless be all the more worthy of praise. When, however, a thing is corrupted, its corruption is an evil because it is, by just so much, a privation of the good. Where there is no privation of the good, there is no evil. Where there is evil, there is a corresponding diminution of the good. As long, then, as a thing is being corrupted, there is good in it of which it is being deprived; and in this process, if something of its being remains that cannot be further corrupted, this will then be an incorruptible entity [natura incorruptibilis], and to this great good it will have come through the process of corruption. But even if the corruption is not arrested, it still does not cease having some good of which it cannot be further deprived. If, however, the corruption comes to be total and entire, there is no good left either, because it is no longer an entity at all. Wherefore corruption cannot consume the good without also consuming the thing itself. Every actual entity [natura] is therefore good; a greater good if it cannot be corrupted, a lesser good if it can be. Yet only the foolish and unknowing can deny that it is still good even when corrupted. Whenever a thing is consumed by corruption, not even the corruption remains, for it is nothing in itself, having no subsistent being in which to exist.1Augustine points out that if God created everything, everything would be good. However, created things aren't good necessarily like God is so they can be corrupted. It is this corruption or deviation from their original created purpose that we call evil. Just like the cold is the absence of heat, darkness is the absence of light, and a vacuum is the absence of matter, evil is the absence of good. By understanding what evil is, it gets us a step closer to understanding why God would allow evil in the world at all.