To me, 'muddy' means colors that aren't pure hues, but are mixed with gray or black to tone them down. They can be of any hue. (In other words, it doesn't mean, fabric the color of mud.)
If you google 'blue fabric' and check the images, the first image is a pure, clear blue, and the third is a 'muddy' blue.
https://www.google.com/search?q=blue...w=1158&bih=606