Do you think it is bad for Democrats or a warning that CA swung to the right in 2020, or is it just a result of high third-party vote in 2016?
Yes, although it's irrelevant on the presidential level. I wouldn't worry about it if it was an anti-lockdown/schools closing/single-party rule in a Titanium D state thing that was unique to the 2020 environment.
Primarily because of Hispanics and Asians swinging right.
Democrats should hope it happens more. The EC/PV disparity is partly due to the fact that they pile up so many wasted votes in California.
Elections are about winning hearts and minds, not minimizing the EC/PV disparity. California swinging R because of Latinos and Asians is not good for the Dems if it wasn't just a COVID-related or pro-incumbent swing.