I learned about this oddity from the Talking Simpsons Podcast, https://podcasts.google.com/feed/aHR0cHM6Ly90YWxraW5nc2ltcHNvbnMubGlic3luLmNvbS9yc3M/episode/MjRjOTNkZDUtYTliZC00OTg3LWI4ZjItZDk5YWZmMzNkM2E3?ep=14

Some Marvel employees were pretty stringent about what deserved a No-Prize, but not Macchio,

>Ralph Macchio (Daredevil): "The No-Prize is an honored Marvel tradition. Of course I give them away—for just about any old stupid thing. I have a million of them."[13]

"No-Prize" seems like a strange name for an award. Is this an ironic award they send to subtly insult people who nitpick the details in their comics?

It was never given it out with contempt. I always interpreted the name as tongue-in-cheek because they weren't sending out an actual prize, so it was the No-Prize.

It was not supposed to be anything. The back of comics had a letters section and Stan Lee would respond to the letters. He would write "you won a No Prize". He was joking, but people would then write back saying they had not received it.

AHA! I was going to ask if OP and I have been listening to the same podcasts.

suspicion confirmed.

No, it was just a tongue in cheek and cheap way to encourage readers to keep buying the comics.