I don't think the grades themselves really matter, but the difficulty ceiling does. That is, if a top grade is hard, it gives people something to strive for and

I don't think the grades themselves really matter, but the difficulty ceiling does. That is, if a top grade is hard, it gives people something to strive for and challenge themselves to achieve and, the people that do, will be a lot better for it. If, on the other hand, the top grade is relatively easy, then the people who would have been challenged get bored and don't become as great as they would have if they'd been challenged, and the rest get amazing (but meaningless[1] grades without necessarily having much skill in the subject. People learn and improve by being at the edge of their competency. When I was studying, to me, the grade was just a benchmark to measure my progress against, but otherwise wasn't something that I was particularly concerned about (in second level, I only cared that I good good enough grades to get the Uni placement I wanted, but beyond that, it meant very little and means absolutely nothing to me now. And third level... I've literally never told anyone[2] what grades I got on my degree. It seems that having a relevant degree at all is a ticked checkbox, but that's about it. Once you have some experience, that's all anybody ever cared about, at least, for me). [1] But I guess even if the spread/variance of grades was high (rather than everyone being clumped at the top because its too easy to get good grades), grades aren't a great indicator for many reasons, so the utility is probably limited either way. [2] In the context of trying to get a job, at least.