While I believe I already explained this...
If you set the top for the expected, the exceptional will not be able to shine as many hit the wall that is the top end of the score set.
It means exactly what it says. I'll use your terms instead.<quoted text>
What does that mean?
If, say, a 85% is considered passing for you, then how do you differentiate the top of the class if dozens of kids are getting 95% or better? Have you seen some high schools' valedictorian list? Some schools have 15 kids all with 4.0 GPAs. Kind of diminishes the accomplishment of a 4.0. How to fix it? If it's the standardized test, make it harder so it's near impossible to get a 100%.
And when are standardized test ultimate decider in a student's fate? I know plenty of people who got less than impressive ACT and SAT scores who went on to very successful careers. Heck! One of my former employers used to be and Engineer and would instruct and manage newly graduated engineering students from top engineering schools while only having a high school diploma himself! There's more to life and success than standardized test.