: What things should one highlight as good in beta reading feedback? When I read people's manuscripts to provide feedback, I can easily identify areas worth improving. However, feedback isn't all

My top recommendation is this:

Identify what the story is attempting to do.

Different stories are different creatures. "I'm pretty sure I know how this ends!" can be a harsh indictment for a mystery story, or excited anticipation for a romance. "You've really invested in this character's backstory" can be great for an intimate melodrama -- or a major drag on a fast-paced adventure.

Think of it this way: both The Lord of the Rings and The Hitchhiker's Guide to the Galaxy are both excellent, remarkable books, but you'd be hard-pressed to point to laudable qualities that both of them share! As a beta-reader, your job isn't to point out where a book compares to either of those classics -- it's to identify what particular qualities this book should be measured by.

You need to let the story tell you what it's trying to be good at. Then, you get to highlight two things:

When the story hits its own particular marks!
Even if the story doesn't hit what it's aiming at -- you can still appreciate the awesome thing the story is trying to do, applauding the goal and the effort. "I see you're trying to be really exciting here!" comes out way more positive than "This bit was pretty boring."

Here's how you tell what you're looking for.

Genre Expectations. Many expectations depend on the evident genre of a story. From a romance you'd expect a compelling duo of characters, and lots of romantic tension; from literary fiction you might seek realism and unusual use of mundane details. Going into a story, think what elements you'd expect that kind of story to have.

You don't necessarily have to love the genre you're reading in -- if you have a strong enough sense of what that type of story should have!
Genres are big and varied; pay attention to subgenre and tone! Is this hard science-fiction, or soft? Gritty crime, or cozy mystery? YA dark fantasy, or adult horror?
The more conversant you are in the genre, the better your lists will be. Mysteries are often fantastic vehicles to explore a particular setting; not just to find the murderer. SF can do awe-inspiring worldbuilding that feels entirely new -- or work as a clear allegory for present-day social issues. You want to know this, so you'll recognize it when you see it!

Story Promises. Every story gives hints about what's going to happen; what's important; what you should be paying attention to. In real life if I tell you "That's a topic I'd rather not discuss," you'd be happy to respect my privacy and leave the matter alone; but in a story, the same line is signalling "PAY ATTENTION, THIS IS GOING TO BE REALLY IMPORTANT." Stories you critique will do the same, knowingly or not, because that's how stories work.

Pick up these hints -- particularly in the first 25-30% of the piece. If the protagonist feels lonely, perhaps the story is trying to be about loneliness? If you keep going "why is this going into all this backstory," maybe the backstory is intended as something that should grab your attention?

Pointing out what promises you're seeing and interpreting is super helpful. Whether the promises are paid off or not; whether the promises are for something you're excited for or not. It tells the author how their story is being understood. Plus, it's nice to acknowledge the basic structural work of signalling to a reader what the story is going to be about.

Story Focus. This is extremely similar to story promises -- whatever the story spends a lot of time on, a lot of focus on, becomes important to the story. If the characters spend a bunch of time bantering with each other, that doesn't mean the story is about the banter -- but that might be some of its tone; its potential appeal.

Whenever the story spends a bunch of time on something that you might not have -- it's worth seeing if that focus is some element that the author really enjoys, and hopes the reader will too.

Unusual Elements. Some stories will have elements to them that will really stand out to you. Maybe it's a stock adventure story -- but with mermaid zombies. A sweet romance -- with a sassy blind person. Or a neat juxtaposition, like a serial killer in a sleepy Mormon community. It's important to notice those elements -- whether or not they're used well, they are special; they stand out; they are going to shape the story around them. If a story has unusual elements, keep your eye on them, and appreciate whenever they're bringing something new or successful to the story.

These are good guidelines which will point you at each story's goals. When you're able to appreciate what the story is doing in general, then you'll be able to highlight and compliment lots of details in particular, from meticulous astrophysics research, to insightful representation of marginalized groups, to perfectly capturing pulpy swashbuckling derring-do.

And where the writing itself isn't perfect -- a goal that's original or ambitious or just plain fun is still absolutely worthy of respect.

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Some time ago I came across a Beta reading worksheet. One common thing is to go through those (or other) points and tell the writer only the problems that one found using them. But IMO it's important to tell the writer your answer to all the points, bad and good.

eg:
Does the story begin in the right place? Yes.
Does it start with a good hook? No.
Typical Feedback: You don't really have a hook in the beginning of the story.
Ideal feedback: You don't really have a hook in the beginning of the story but I believe it starts in just the right moment, with the right event. I think it may need a different PoV or cut down on the exposition because it really slows down the whole momentum.

Jami Gold's blog entry, which has the worksheet I mentioned, also has these interesting ideas:

Author Connie Flynn advises that we should avoid “Why did you…?” feedback comments. Why questions along those lines tend to put people on the defensive. She instead shares these excellent suggested critique phrases:
I don’t understand…(whatever it is).
The detail seems…(to slow the pace, insufficient, whatever).
The…(character, setting, etc.) is coming across…(feisty, depressing, important, etc.). Is that what you intended?
Did you want to convey (irritation, happiness, whatever)?
How did…(Sally get to the store, John saw down the tree, etc.)? (Use to point out missing information.)
Wouldn’t a character…(who has such and such a trait) do or not do…(such and such)? (Use to point out inconsistent behavior.)
Wasn’t…(John a blue-eyed man, Sally submissive, etc.) in Chapter (xxx)? (Use to point out inconsistent information.)
Carol’s (goal) seems to be… . Is that correct?
Your story question seems to be… .
I’m confused about John’s motivation.
And most important . . . I really liked… . (end on a strength)

While this advice ends with strengths, I would argue you shoul include strengths within the block of criticism. So if a character comes across as feisty or depressing in a portion of the tale (or all of it) you can balance that criticism with another character which you feel is well-developed and compare the two.

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Things that are good are things which you liked, and elements which achieved what the writer was going for.

Funny bits: anything which makes you laugh (which is clearly supposed
to)
Nice turns of phrase
A moment which touches you
A suspenseful scene which leaves you tense and breathless
A protagonist you understand
A character who is complex and rounded rather than flat and boring
Motivations which make sense
Successful foreshadowing
Successful showing, not telling
A plot which works and doesn't leave unanswered questions

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Beyond typos and grammar, unless you know what the writer was attempting to achieve what areas can you really say are in need of improvement?

Good and bad are merely concepts. There is only really 'like' and 'dislike'. You may comment that you found a section confusing but have you considered the author intended it to be so?

Personally, I prefer to ask questions.

Did you intend this section to be passive?

Are you aware you have used the word 'was' 26 times in the first to two pages?

Are you aware 17 of the first 22 paragraphs begin with the word 'I'?

Does the section where the character is brushing their teeth really add to the story?

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