I'm not sure either, but here's my guess.
When you take a course in England, you either get a 'letter grade' or you 'pass or fail'.
A letter grade means that you can pass the course at a number of levels. The levels run from A - G in most cases (especially GSCE courses), A = excellent, B = good, C = above average D = average E = below average and so on.
Pass or fail simply means that there is a mark that the student must achieve to pass the exam or course, for example 30 out of 40. If a person gets 29 out of 40, they fail the course and have to try it again to succeed. If they get 30 or more, the pass the course.