When a report is market as "unhandled", is it because moderators were busy or something or is it a way to acknowledge the report is not bad but not so good as to act either?
Consider such a report as almost bad. If it was good, it would have been handled. Since it wasn't the mods don't agree with you, but they are also not sure how to look at it.
AFAIK, the mods have a restricted board where they can discuss reports and in a case where a report is presented and no one can come up with a solution, it will be marked as bad.
I guess this is a typo, right? You wanted to say "unhandled", not "bad". If the mods don't know how to react, they won't handle the report, hence it remains unhandled.
I assume the unhandled cases are not ‘cleared’ every month as they would not show up in your report history anymore ?
That should be correct. The reports remain unhandled until the mods either mark them as "good" or "bad". I have 5 unhandled reports God knows from when.