Praise be to Allah.

Firstly:

Allah, may He be exalted, says (interpretation of the meaning):

“That is He, the All-Knower of the unseen and the seen, the All-Mighty, the Most Merciful.

Who made everything He has created good, and He began the creation of man from clay”

[as-Sajdah 32:6-7].

What is meant by making everything good here is making it perfect and making it properly; it does not refer to beauty of form. So this verse is like the verse in which Allah, may He be exalted, says (interpretation of the meaning):

“The Work of Allah, Who perfected all things”

[an-Naml 27:88].

Some of the scholars are of the view that what is referred to by making everything good, in this verse, is beauty of form. Therefore the verse applies specifically to those created things that Allah, may He be exalted, has made beautiful.

Al-Qurtubi (may Allah have mercy on him) said:

“Who made everything He has created good” means that He made it with precision and perfectly, so He made it properly in order to fulfil the purpose for which it is intended.

Ibn ‘Abbaas and ‘Ikrimah also referred to this meaning when they said: A monkey’s rear end is not beautiful, but it is made well and made perfectly.

Ibn Abi Najeeh narrated that Mujaahid said: “Who made everything He has created good” means: He made it with precision.

This is like the verse in which Allah, may He be blessed and exalted, says (interpretation of the meaning):

“Our Lord is He Who gave to each thing its form and nature, then guided it aright”

[Ta-Ha 20:50].

That is, He did not create man in the form of an animal, and He did not create animals in the form of man.

It was said that this is general in wording but specific in meaning, and what is meant is that He is the One Who made good everything that He created. End quote.

Tafseer al-Qurtubi (14/90).

The verse quoted in the question is like the verse in which Allah, may He be exalted, says (interpretation of the meaning):

“and [Allah] has given you shape and made your shapes good (looking)”

[Ghaafir 40:64].

There are two views among the commentators concerning this verse.

An-Nasafi said in his Tafseer (3/436):

“and [Allah] has given you shape and made your shapes good (looking)” that is, He has made you the most beautiful and good-looking of animals, on the basis of the fact that man does not wish for his image to be like that of any other creature. Part of his good image is that he was created to stand upright, not facing downwards, and whoever is regarded as ugly, deformed and bad-looking does not look so bad in reality, but beauty is of varying degrees, so the one who is regarded as ugly is less beautiful than the one who is of a higher level of beauty, therefore he is not regarded as being beautiful, but he is still within the range of beauty. Wise people say that there are two things that have no limit: beauty and eloquence. End quote.

See: Tafseer ar-Raazi (15/365); Tafseer an-Neesaboori (7/196).

Based on that, what is meant by the words, “Who made everything He has created good” is: He made it perfect, with precision. This does not contradict the fact that some creatures are ugly or distorted.

It may be that what is meant here is beauty of outward form.

This is not contradicted by the fact that there are some distorted or ugly creatures, because they are still within the range of what is made good or well-made, and being made good and being beautiful may be of various levels. So these creatures are more beautiful than those that are less than them in terms of beauty, but the beauty of the latter is not apparent, because we are comparing it with something more beautiful than it. If we were to compare it with something that is less beautiful, then its beauty would become apparent.

Secondly:

With regard to the idea that the images of any created being could be better than it is now, then yes indeed, Allah, may He be exalted, has the power to do all things. He has created the angels in the best, most perfect and most beautiful of forms, so we cannot ask: Why didn’t Allah create all creatures in the form of angels? Because this is contrary to the wisdom of Allah, may He be exalted. Allah, may He be exalted, has created every type of creature for a specific reason and to fulfil a specific purpose, according to His will. Therefore He created every creature in the form that would fulfil that wisdom and purpose, and He created it well and made it good. Therefore there is no way that any creature could have been created better or more beautiful than that.

Even diseases, disasters and the evil that men or other creatures do – Allah created all of that and He did it well and with precision.

Allah created sickness in order to test the sick person: will he bear it with patience and acceptance, or not?

And He created it in order to test the one who is healthy and sound: will he show gratitude for the blessing that Allah has bestowed upon him, or not?

Allah, may He be exalted, says (interpretation of the meaning):

“And We have made some of you as a trial for others: will you have patience? And your Lord is Ever All-Seer (of everything)”

[al-Furqaan 25:20].

So He tests the rich by means of the poor and the poor by means of the rich; He tests the weak by means of the strong and the strong by means of the weak; He tests the leaders by means of the followers and the followers by means of the leaders; He tests the master by means of the slave and the slave by means of the master; He tests a man by means of his wife and his wife by means of him; He tests men by means of women and women by means of men; He tests the believers by means of the disbelievers and the disbelievers by means of the believers.

Ighaathat al-Lahfaan (2/161).

As-Sa‘di (may Allah have mercy on him) said in his commentary on the verse:

“Fir‘awn (Pharaoh) said: ‘Who then, O Moosa (Moses), is the Lord of you two?’

 [Moosa (Moses)] said: ‘Our Lord is He Who gave to each thing its form and nature, then guided it aright’”

[Ta-Ha 20:49-50]:

that is, our Lord is the One Who created all things, and gave each created thing its form and nature that befits it and is indicative of His perfect artistry in His creation, such as the size of its body, whether it is great or small or in between, and all its other attributes.

Then He guided every created being to the purpose for which He created it. This guidance in general terms can be seen in all created things; hence you see every creature striving for the purpose for which it was created of attaining benefits and warding off harm, to the extent that Allah, may He be exalted, has even given animals sufficient intelligence to be able to achieve that.

This is like the verse in which Allah, may He be exalted, says: “Who made everything He has created good” [as-Sajdah 32:7]. The One Who has created all things, and created them well, such that no one with any reason could think that there could be anything better than them in design, and He guided them to that which is in their best interests, is indeed the true Lord. Denying Him is denying the greatest of all that exists; in fact it is arrogance and a blatant lie. End quote.

Tafseer as-Sa ‘di (p. 507).

Shaykh al-Islam Ibn Taymiyah (may Allah have mercy on him) said:

So the created being, on the basis of the purpose for which it was created, is good and proper, even if it has some evil aspects, because the evil is secondary and partial, and it is not pure evil; rather the evil that is intended for a good purpose, that outweighs the evil, is something good on the part of the Doer, the Most Wise, even though it is bad on the part of the one who did it.

With regard to the one who thinks that the intended purpose that is based on wisdom could be achieved if the bad thing was not there, he only said that because he does not know the real nature of things and how things are interconnected. For when the Creator creates a thing, He must inevitably create the requirements thereof, because for something to exist or be created without its requirements is not possible. End quote

Majmoo‘ al-Fataawa (8/512).

He also said:

Although Allah, may He be exalted, is the Creator of all things, He is also the One Who created good and evil, because of His divine wisdom on the basis of which everything He does is good and proper, as He says (interpretation of the meaning):

“Who made everything He has created good, and He began the creation of man from clay”

[as-Sajdah 32:6-7]

“The Work of Allah, Who perfected all things”

[an-Naml 27:88].

Hence evil on its own cannot be attributed to Him; rather it is either to be implied in general terms or it is to be attributed to its cause, or it is to be referred to in the passive. End quote.

Minhaaj as-Sunnah an-Nabawiyyah (3/142)