Use 'too bad' to show empathy when reacting to minor disappointments or problems, not serious tragedies. Missed the bus? Too bad, but there'll be another soon.
Pro Tip 2/3
Casual Speech
'Too bad' is usually informal and best suited for conversations with friends, not in formal settings. Your team lost? Too bad, better luck next time!
Pro Tip 3/3
Slight Sarcasm
Sometimes 'too bad' can have a sarcastic edge, so be careful with your tone to avoid misunderstanding. You ate the last cookie? Too bad, I wanted one.