Earlier quoted context omitted.
Based on their actual merit? For example, if someone on HN says ‘a 50th percentile intern’ at a certain company, they probably wouldn’t be suggesting the intern literally has a gpa in the 50th percentile among all the other interns at that company.
You're talking about the way the world should be. Reality is different. For instance, having graduated from Harvard is going to get you a fairly good job _regardless_ of their GPA. Similarly, there is no objective way to measure "merit" that isn't unfair to _someone_ and also scales to dozens/hundreds/thousands of students. So people use GPA. Life isn't fair.
Clearly peers do evaluate each other in any ways they choose, pretty much every day at Harvard I imagine.