What does the rating system mean to a guy and is it used often?

Too much and it's very shallow. It is actually trying to sum you up into a number, so it doesn't value you as a person. It, in effect, makes you equal to all other 'nines' out there, rather than a unique individual. This guy may think he's complimenting you, but in truth, it is fairly insulting. At least I'd find it like that. I won't deny that he's saying you're incredibly pretty, but the way that he's saying it makes it sound like you're just that and nothing more. It's sick, and I hate it with a passion. You're unique and you shouldn't let some person's perceptions of how you look determine how you feel about yourself. I don't use this for that very reason. It just devalues the individual too much, so I prefer to take each girl as she comes into my life with her own unique experiences and life.

Well, 10 is good, 0 is bad.
So you're doing pretty damn well.
All it is, is an arbitrary way of verbalizing how hot you are in relation to the girls around you. Think of it as a bell curve. There are very few 10's and very few 0's.
Apparently. On your worst day, you're better than average, and on your best day, you're pretty goddamn hot. Which I guess is fairly important.