Mike Page has done a lot of tweaking on the system over the years, but at it's heart it is an ELO based ratings system. More info can be found here...
en.wikipedia.org
Have to be careful here. There are some things about the way ratings are interpreted once you have them that are similar to ELO ratings. So if people are familiar with ELO ratings from another application that might be helpful.
But the big part--the way the ratings are generated--is fundamentally different than ELO (and hasn't changed in 7 years).
Here are a few distinctions
(1) Suppose your rating took a nose dive because you lost a couple sets badly last night to a player the system thought was an average league player. Then today that guy wins a pro-tournament and the system now understands he is pro level. With ELO, your rating drop is water under the bridge: it stays with you. With FargoRate, you go back up with that new knowledge.
(2) With ELO you have to "start" somewhere. You have an initial rating and then you incrementally move up or down with new play. Though the influence of where you started diminishes as you play a lot, it always follows you and never really goes away. With FargoRate, there is no concept of "start." [This is also true of, say, a batting average]
(3) Suppose everyone in Alaska is rated too low, and a small planeload of Alaskans come and tear up a big event in Vegas: pretty much across the board perform higher than expected. We learn Alaska 500s play even with 600s from everywhere else. With ELO, the people on the plane go up but everyone else in Alaska stays at the depressed level. With FargoRate all of Alaska can go up.
(4) With ELO, the rating update after a tournament could be done with a single person plugging numbers into a calculator or with a simple spreadsheet. With FargoRate it takes an army of powerful computers churning away in the cloud for hours.
The ELO approach has been around for a long time, even in pool. Bob Jewett did ELO-type stuff more than two decades ago in San Francisco. Ron Shepard did it in Chicago. NAPA leagues have been doing it for a long time. Compusport I believe recently started doing it. They do it in Norway. FargoRate is way different.