Yeah, pretty much.
They compare your moderated assessment mark and your raw HSC exam mark, and place this on an overall scale which determines your overall performance in the state. It's meant to describe your performance as if you did the same subject as someone else, even if you didn't do that subject. This then determines your aggregate and thus the top x students will get 99.95, the next y students get 99.90, the next z students will get 99.85 etc.