Tony -
Someone else on the site will remember the specifics better than me, but the general gist is a system that identifies how good a course is by how hard you should be willing to work to get to see it (the full explanation is in The Confidential Guide...). For instance, a "10" is defined something like: "Drop everything, book the next flight and get here soon, because you don't know how good golf can be unless you've played here," whereas a "6" is something like "one of the better courses within a 100 mile radius. If you're close, make the drive to see it, you won't be disappointed."
Tom also states that his scale is purposely slanted to parse between the upper ranges of golf courses, so the "average" golf course is a "3" on his scale. Additionally, he states that anything rated "6" or better gets his seal of approval (I think it's 6, it might be 7).
To really understand it fully, you should read the accompanying reviews in the book as well.