From Nookipedia, the Animal Crossing wiki
Each entry is rated in points according to size (small, average, big), rarity and luster (dull, average, impressive) - which makes it random to determine what insects will be rated highly, but more common insects tend to be overall lower rated than rarer ones. In Animal Crossing: Wild World, bugs are rated by size only, meaning the same species of insect may be able to overwrite an already existing entry.
During the day of the competition, each time a player gives a bug that achieves a new high score, they receive a gift from Nat (Tortimer in Animal Crossing: Wild World). In Animal Crossing: New Leaf, players will receive an Insect set item if they hand over a record-breaking bug worth at least 80 points. At the end of the competition, the winner of the Bug-Off receives a mention on the Bulletin Board as well as a trophy through the mail. There are no trophies for second place in Animal Crossing: Wild World and Animal Crossing: City Folk.
In Animal Crossing: New Leaf there is an awards ceremony where trophies are presented to the top three participants. It occurs in Nat's tent between 6 p.m. and 9 p.m., and trophies will be mailed instead if the player does not show up between those times.
The Bug-Off is the counterpart to the Fishing Tourney, which runs during the other eight months of the year. The Bug-Off is different to the Fishing Tourney, since there is only one type of competition - bugs are caught according the color, rarity, luster and size only, unlike the Tourney which has two competitions - size and type.
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