Yes, I don't remember having any trouble at all understanding the grading that they did, probably because they were constantly telling us about it. At my first school they'd pass judgement on every piece of work we did, the teacher would draw a star on it if it was good, and you'd get a "sticky star" (i.e. a sticker of a star) if it was exceptionally good. If it was acceptable you got a tick, and if it was unacceptable you got a cross. They were always adding up our marks and ranking us in league tables according to performance. They even had a "top boy" and "top girl" award in the final year of that school when we were 7 years old.
In my next school the desks were arranged in rows, top row, second row, third, and bottom, and every so often they'd move us around according to our latest scores, so we were being continually reminded of the importance of our performance as individuals. The teacher would look down on those in the bottom row and was often downright nasty to the kids who didn't perform well. I was lucky enough to mostly do well so I was OK with it all.
There wasn't really anything about it for me not to understand. Getting the right answers led to approval and rewards from teachers and parents, and high ranking was just an extra dimension of that process. Getting the wrong answers meant the opposite for those who for some reason didn't have my luck. I saw that equation operating every day. I never wondered why they did it all, it was just there.
As for actual exam grades, I knew that a high grade meant extra rewards, but as my performance began to drop over the years I wasn't too bothered by the actual numbers, I was only really concerned with the binary "pass" or "fail," and my only real interest was avoiding that "fail" label, which I managed to do, by the skin of my teeth.