There are a variety of factors to determine a domain names grade. The first thing to remember is that the ranking is relative; it compares each result to of the other results in the search to determine the ranking and being relative constitutes periodic re-evauation. A few of the criteria used to determine the ranking with some companies are:

• Strength of the synonyms in the results.
  
• Length, the number of characters (shorter is better)
• Whether the form of the word changed, for example if your original search term was pluralized
• Whether it has hyphens
• Whether a prefix or suffix was added
• The popularity of the top-level domain (a .com will rank higher than a .org)
• The number of times the result appears in different TLDs (among those we handle)
• The popularity of the keywords in the zone file

As a further explanation, there can be several ways to measure the worth of a domain name.

• The grade is the overall value of the domain name relative to the other search results. In other words, the top result is the best match to your original search term, among all the results returned. It doesn't mean that there isn't a better domain name out there somewhere (for instance, the best one might already be registered), but it does show you which is best one out of all the available names. The ranking is determined by an algorithm, which takes into account a number of factors, including:
• Relevance means how closely the result is related to the search term you originally put it. This is mostly measured by the strength of the synonyms that are used in the result.
• Name popularity means how often the same domain name is registered in other TLDs. For instance, if one of your results is domainsbotrocks.com, and it's already registered in .net, .org, .biz, and .info, then it would have a very high name popularity score.
• TLD factor ranks the top-level domain of the returned result. A domain name is scorec in .com higher than one in .org, so domainsbotrocks.com is worth more than domainsbotrocks.org. The amount domain names were selling for determines the relative worth of the TLDs. Remember, however, that only you can determine which domain name is right for you; there are plenty of cases where a .info or .org name is preferable to a .com name - it just depends what you're using it for.
• Keys popularity is a score that looks at how often the keywords in the result occur in other registered domain names. For instance, "free" is a popular keyword, and so if the domain name suggestion contains "free", that would tend to give it a higher score.