Animal farm is a dystopian novel in that it

proposes an uncertain and unpleasant future
presents a society marked by a miserable existence
introduces story elements that are not possible in real life
includes animals that perform human activities as characters

It’s the second one: presents a society marked by a miserable existence

Animal Farm is a dystopian novel in that it presents a society marked by a miserable existence.

Explanation:

Dystopian works of fiction have certain characteristics that mark their themes.  A dystopia is the opposite of an utopia, meaning this kind of work revolves around inequality between classes, wrongful use of technology, wars or disasters, authoritative governments etc.

"Animal Farm", an allegorical novella by George Orwell, can be considered dystopian since it presents many of the characteristic elements. The story is a critique to the authoritarian regime in the Soviet Union, after the Russian Revolution. In the novella, the animals that live in a farm take control of it by expelling their human owner. That is the very first mark of dystopia in the story: a revolution that changes society drastically.

At first, the animals believe they are about to live in a perfect society, where all animals are equal. However, the pigs take the power for themselves, begin to spread false propaganda, kill the animals who threaten their governing, and demand that the animals live in worse conditions than themselves. It's a miserable society, greatly injured by inequality and injustice - a typical dystopian society.

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