I'm no expert; the process is complex and arduous but here is my input:
School rankings don't directly affect your atar, but it IS indicative/ a guideline to the general performance of a school's cohort (which indeed has an effect). From the Board of Studies page,
"
The mean of the school group’s assessments is adjusted to equal to the mean of the examination marks obtained by the students in that group." and
"
The top assessment mark is adjusted to equal to the highest examination mark obtained by any student in the group."
(More can be read at
http://www.boardofstudies.nsw.edu.au/hsc-results/moderation.html)
So before anything, your final HSC mark is comprised of your performance in the final exam for HSC - called examination mark (worth 50%) and your moderated assessment mark (the other 50%). N.B. The moderated assessment mark is the mark you will obtain based on your internal school rankings and your cohort's performance in the final exam
Paraphrasing the above points,
- The better your cohort, the better everyone's moderated assessment mark will be
- If you are coming first, you cannot be pulled down and will take the examination mark of 1st place as your moderated assessment mark (This is a crucial point if you're someone from a poor-ranking school who wants to pull off a 95+ or something (me). However, It IS still disadvantageous though being in a poor school, as you don't have the insurance of other students who may perform better than you on the day of the final exam or in case you falter with your performance - Though, if you were in a better school you may not have had that first place - so i don't know which is the longer stick)
If you do not understand assessment marks, i suggest you read further into the link above