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It compares people of the same age or age category and assumes that IQ is normally distributed, that the average (mean) is 100 and that the standard deviation is something like 15 (IQ tests sometimes differ in their standard deviations).
How an IQ Test is Scored. The term IQ actually stands for intelligence quotient. To determine a person's IQ, a person's mental age is multiplied by 100 and then divided by the chronological age. The average IQ is said to be 100, so anything above that is considered above average. The range of what is considered developmentally disabled is thought to be anything below 70. Most people who are considered geniuses have IQs above 145. What an IQ Test Does Not Measure.