Purely eye of the beholder effect. If you want to see it, you will. If you don't want to see it, you might not. It's definitely there but feels like it is blown collectively out of proportion.
As to what is it? Imagine a picture frame the size of the mini with a long piece of ruled (lines for writing) paper underneath. Reach into the frame with a finger and move the piece of paper up and down quickly. No matter where you touch, when the part of the paper you touch moves, so moves all of the rest of the paper... as a whole. The scroll is smooth edge to edge, top to bottom. The ruled lines remain consistently straight. This seems to be the expectations of how those who fault the jelly want their iPad mini electronic paper to move when scrolling.
The jelly effect is noticing the part you are scrolling moving as fast as you want it to move while the rest of the page has to catch up to the sudden move... like the piece of paper has a bit of elasticity to it and it is possible to have a portion of it moved higher or lower than the rest, until the rest can "catch up" to where you are moving it. In this analogy, the ruled paper lines might seem to bend a bit. The "catch up" is very quick- nothing dramatic. It's not glaringly obvious unless you look for it. You'll have a better chance of noticing it to the max by looking at your finger and observing the other end of the "page" with your peripheral vision.
Some claim to not notice it at all. Others claim the opposite extreme. Thus, eye of the beholder. Go see a Mini for yourself, load up a long web page and scroll up and down quickly. You'll see it if you look. It probably won't seem as bad as the collective gripes imply. I definitely see it with my Mini but the whole package washes whether I choose to call this negative or not. If you like the rest but it bugs you, have a slow blink while you scroll a page and it will "catch up" while your eyes are closed. And the slower you scroll, the less it shows.