Every rule has a weight. The grade is the share of weight the page earns out of all rules that apply to it.
Severe rules weigh 10, medium rules 5, low rules 2. A passed rule earns its full weight, a hint (warn) half of it, a failure nothing. Rules that do not apply (n/a) are left out of the calculation.
A from 90 % · B from 75 % · C from 60 % · D from 40 % · F below 40 %. The four areas get their own percentage in the same way.
If a severe rule for HTTPS or indexability fails, the grade is at most D, however good the rest is. A page that is not delivered securely or may not be indexed cannot be found, no matter how well it is built.
Every report shows the version of the ruleset. When rules or weights change, the version goes up, so reports from different times stay comparable.
A hint marks something that works but can be done better. It earns half of the weight so that the grade separates a good page from a very good one.
Yes, if every applicable rule passes. Rules that do not apply never lower the grade.