The grading system determines how the grade items in your grade book contribute to users' final grades. There are three options:
The weighted system calculates grade items as a percentage of a final grade worth 100%. The Max. Points you assign to individual grade items can be any value, but their contribution towards the category they belong to and the final grade is the percentage value (weight) assigned to them.
Use the points system when you want the Max. Points assigned to a grade item to be equal to its contribution to the final grade. Final grades are calculated by adding a user's score on all grade items together and dividing by the sum of the Max. Points values. The sum of the Max. Points values for all grade items does not need to equal 100.
For the Formula system, grade items are calculated using the points system, but a formula is used to set conditions around how grade items contribute to the final grade. For example, you could require that users receive at least 50% on their midterm and final exam to pass a course.