The IRB World Rankings are calculated using a 'Points Exchange' system, in which sides take points off each other based on the match result. Whatever one side gains, the other loses.
The exchanges are based on the match result, the relative strength of each team, and the margin of victory, and there is an allowance for home advantage.
Points exchanges are doubled during the World Cup Finals to recognise the unique importance of this event, but all other full international matches are treated the same, to be as fair as possible to countries playing a different mix of friendly and competitive matches across the world.
Any match that is not a full international between two member countries does not count at all.
All member countries have a rating, typically between 0 and 100. The top side in the world will normally have a rating above 90.
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