It is bad for the cow. According to my vet it happens in heifers when the growth of the calf presses on the vein leading from the udder to the lungs impeding the flow and causing a backup of fluids. The navel can swell too.
He gave us a large syringe with a steriod in it, we had to give the heifer shots about every three days prior to calving, and maybe afterwards, I don't remember, it has been a while.
But it could also just be the normal enlargement of the udder, but the navel swelling is a big clue that it is not normal.