Quality Score is assigned to individual keywords in your account and is an estimate based on expected clickthrough rate, ad relevance, and landing page experience for that keyword. Your Quality Score helps you to determine the quality of your ads and landing pages, and is based on past performance data from previous ad auctions.
The higher your Quality Score, the less you can expect to pay and the higher you can expect to rank.
Quality Score is measured on a scale of 1-10.
The more relevant the components of your Quality Score mentioned above are to the people searching, the more likely it is that you will reflect a high Quality Score.
During the ad auction quality score is not used to determine ad rank; quality score is an aggregate estimation of your overall performance in your previous ad auctions.
Source: About Quality Score