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Word Social uses the Elo rating system, which was invented by a physics professor named Arpad Elo. It was originally intended for chess but is now used for many games and sports.
Your rating (basically a number between 0 and 3000) indicates your relative skill. For example, if you play somebody who has a rating that's 200 points lower than yours, theoretically you have a 75.8% chance of beating them.
After every game, your rating will go up or down a few points depending on who you played, what their ratings were, and how well you did against them (i.e., if you won or lost).
If your rating isn't behaving as expected, please keep a few things in mind: