A dystopian society is contrasted with a utopian one. In a utopia, the society is blissful and self-sufficient, whereas a dystopian society is a misconstrued attempt at utopia. In a dystopian society, egalitarianism and attempted perfection are forced upon the residents by some form of governing body, and their superstitions and naivety of the world keep them bound to that government.
In the book Gathering Blue, the village is a constructed compound of sorts that is ruled by a central—quite literally—government of individuals in the community. The individuals in this society are unwittingly oppressed because the government retains all forms of individuality, expression, and intelligence to itself, and they prevent people from fleeing by telling stories of beasts outside the village that will kill them if they escape. In doing so, they keep the villagers isolated from intelligence, freewill, passion, and the outside world to sustain this artificial community.
The oppression—through fear mongering, propaganda, and isolation—by restricting forms of learning and expression, as well as physically restricting people from the outside world, is a clear example of a dystopian society.
There are many characteristics of the society in Gathering Blue that make it dystopian, and perhaps one that breaks the rules for a typical dystopia.
A dystopian society is usually understood as a future society in which the effort to create an ideal society, or utopia, has backfired, creating a culture that suppresses freedom and personal achievement, often in favor of a bland, homogeneous citizenry. The community in Gathering Blue fits this description, except for the part about the ideal society. It doesn't seem that anyone in the community is under the impression that their society is in any way ideal. They live in the shadow of the "Ruin," so they know they are a fallen culture. Even the Council of Guardians does not seem to promulgate the view that they represent any ideal way of life.
Beyond that discrepancy, however, the Gathering Blue culture is dystopian in many ways:
The society uses propaganda to control the society, particularly in the ritual of the Annual Gathering with its singer's robe and song.
They restrict independent thought. Women are not allowed to read, and when Annabella says there are no beasts, she is presumably killed by either Jamison or the guardians.
Their worship is meaningless; they revere a "worship object," which is a cross left over from before the Ruin, yet they don't seem to even understand what it represents.
Citizens are controlled by fear of the outside world; they are kept inside the community by fear of beasts, which no one has ever seen.
Citizens live less than fully human lives; they fight and bicker, and there are no uplifting roles in society, such as pastors, educators, or philosophers. The only artists are taken by the oligarchy and used for their purposes; they aren't allowed to use their gifts freely.
Citizens conform mindlessly to the desires of the leaders. Even though the leaders live in the modern Council Edifice while the citizens live in mud huts, the people don't display jealousy or rebellion toward the oligarchy.
Lois Lowry has portrayed a future dystopian society that complies well with the standard definition of a dystopia.