Good question. Thank you snitch-n-stitch for asking it. My response was so long that I decided to just post about it. ;)
The reality is, Children's literature is not defined by content. It is defined by the age of the protagonists.
Sex, drugs, violence, abuse, etc. are all a-okay in the publishing world for YA literature.
In general you try to steer clear of the really heavy stuff for Middle Grade, but in YA anything goes.
That being said as the industry standard....my opinion is - it all depends!
I have read some really intense gripping YA books about some hard topics - namely abuse, anorexia, suicide, abortion, etc. and those books usually are the ones that affect me the most.
What I don't like is crass content, sexuality for the sake of baseness, lude comments/content and excessive expletives. In fact my favorite books about hard content are really clean books.
With THE HUNGER GAMES trilogy I have no problem with it being marketed as YA. Here are my reasons:
1) Although the content is violent by nature, it is written so well, and so beautifully that it isn't gory, but still makes you FEEL the content. It doesn't glorify violence, rather depicts it in a very sad and real way.
2) The protagonists really are YA age.
One thing I was told at a conference is chances are unless your book is a BIG hit like the HUNGER GAMES, your audience are those 2-3 years younger than your protagonist up until their age. If you're lucky you can go one year older.
So Katniss in book 1 is sixteen yes? So the audience is 13-17 year olds. Which is around 8th-12th graders. I think that is an appropriate age for all the content of the books.
3) In the end it is up to the individual reader and if a juvenile, their parents, of what content is appropriate for them to read.
4) I find it interesting that people argue that YA books aren't for YA kids, but what do we throw at them in schools? Adult novels with adult content. Is MACBETH any less bloody than HUNGER GAMES? What about LORD OF THE FLIES when Piggy is sacrificed by the other boys for vicious reasons? We shouldn't shy away from hard content with our kids, but rather talk to them about it.