Fumizuki Academy has 6 classes, each of about 50 students of each year level, from A to F, with the smartest class being A and the dumbest being F. The placement exam determines the class you will be in. The higher you score, the higher up in rank you will be, meaning you will be in A if you score a very high score, but if you score very badly, you will be in class F. Leaving the exam halfway will result in you getting 0 marks (sending you to class F) and so will forgetting to put your name, or putting it in the wrong place.
The facilities of each class level varies, meaning that the higher classes, like class A, will get better quality facilities, e.g. class A gets a larger room than the other classes and things like a wall-sized plasma-screen TV instead of a blackboard, a fancy glass ceiling, high-class drawings hung on the walls, ornamental plants, and things that made it look like a 5-star hotel, and to top it, everyone gets a laptop, personal air-conditioner, fridge, adjustable chairs, etc.
However, class F is on the other end of the scale. The classroom is a relatively small room and gets no funding for furniture or equipment, with no chairs, simple cushions, tatami mats, Japanese-style tables, (then down to cardboard boxes and drawing boards) no pre-provided chalk for the blackboard, faulty equipment and the room would be dirty, like that of an abandoned house. If something broke it isn't replaced, you used glue or tape to fix it, for example, with a broken window, you get plastic bags and tape to fix it.
The system was put in place to incentivise students to do as well as possible on the tests and study hard. Essentially rewarding the good students and punishing the bad ones.
The classes below are the ones mentioned in Baka to Test to Shoukanjuu, the 2nd year classes: