Quoting from Word 2003 Help:
When Microsoft Word finishes checking spelling and grammar, it
can display information about the reading level of the document,
including the following readability scores. Each readability
score bases its rating on the average number of syllables per
word and words per sentence.
Note For some European languages within an English document,
Word displays only information about counts and averages, not
readability.
Flesch Reading Ease score
Rates text on a 100-point scale; the higher the score, the easier
it is to understand the document. For most standard documents,
aim for a score of approximately 60 to 70.
The formula for the Flesch Reading Ease score is:
206.835 – (1.015 x ASL) – (84.6 x ASW)
where:
ASL = average sentence length (the number of words divided by the
number of sentences)
ASW = average number of syllables per word (the number of
syllables divided by the number of words)
Flesch-Kincaid Grade Level score
Rates text on a U.S. school grade level. For example, a score of
8.0 means that an eighth grader can understand the document. For
most documents, aim for a score of approximately 7.0 to 8.0.
The formula for the Flesch-Kincaid Grade Level score is:
(.39 x ASL) + (11.8 x ASW) – 15.59
where:
ASL = average sentence length (the number of words divided by the
number of sentences)
ASW = average number of syllables per word (the number of
syllables divided by the number of words)
A Reading Ease score of less than 50 equates to a 12.0 Grade
Level score in Word. The 12 is coded in, and you can't change
it. To see what grade levels Dr. Flesch intended to equate with
Reading Ease scores of less than 50, see the article he wrote at
http://www.mang.canterbury.ac.nz/writing_guide/writing/flesch.shtml .