Here is a flowchart outlining the processes involved in obtaining your UAI and HSC.
http://www.boredofstudies.org/other/flowchart.pdf
Basically your HSC is divided into 2 parts. The external HSC exam mark and the internal assessment mark.
The HSC mark is simply the average of the 2.
To answer why after all your assessments it is a good idea to help your peers is because to determine your internal assessment mark, it is taken from the pool of the HSC exam marks that are the result of everyone in your school doing the HSC exam.
If you were ranked 1st, the highest HSC exam mark in your subject will become your moderated assessment mark. If you were ranked 5th, your HSC assessment mark will be approximately the 5th highest HSC exam mark. etc.
This means that the better everyone in your school does, will result in a pool of marks that are high. And these high marks will be distributed as your moderated assessment mark. This probably sounds a bit confusing which is why you should read this thread first.
http://community.boredofstudies.org...na/6642/explanation-hsc-marks-moderating.html