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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).
A Breakdown of IQ Scores. The average score on an IQ test is 100. Sixty-eight percent of IQ scores fall within one standard deviation of the mean. That means that the majority of people have an IQ score between 85 and 115. 1 to 24: Profound mental disability; 25 to 39: Severe mental disability; 40 to 54: Moderate mental disability