From Carleton Moodle Docs
Below are several different options that will help teachers organize and set up the Gradebook.
A grade item is usually an activity where students are given a grade. These items are usually the grades from assignments, quizzes, attendance, etc., but it is also possible to create a new grade item that does not appear in the course page. This is best used when students are given an offline assignment and the teacher would like to input the grade into the Gradebook.
Grade letters are the visual representation of a student's grades in the form of A through F. The grade percentage that dictates what letter can be changed in the Gradebook options.
A grade category is useful to help organize several assignments in the Gradebook. For example, you can create a large "Quiz" category that holds every quiz given in the course for easy viewing. You are also able to weight the entire section of "Quizzes" and it will automatically weight every quiz in that category evenly. These individual weights can be overridden if needed.
Grade calculations can be used to change the way that the Gradebook will calculate grades. This setting should be rarely changed as Moodle will preform all calculations already.
Users with access to the Gradebook are able to look at when grades for certain users are changed and what they have been changed from. This is helpful for when there is a continual activity that changes over time and the teacher regrades the activity each time