***** rating your photos

Watching this thread closely. I really need help in this department!

I use Scraproom software which has a five star rating system. This is my breakdown.

***** = stellar, absolutely must print for framing or to scrap
****   = great photo, probably will scrap
***     = just okay, but might make the cut if it helps tell the story
**       = meh. Might improve with some editing
*         = not worth printing but won't delete

Any that are really blurry, out of focus, way too dark just get deleted. When I want to scrap a particular topic or group of pictures, I will first do a sort of three stars or better to see what I have. Then if I still need something else I'll look at the rest.

What's nice about the Scraproom software is that going through and rating the photos is a pretty quick process. I try not to spend a whole lot of time analyzing the individual photos at that point because I can do that later when I choose which ones to crop/edit and print.

You were too vague but this: "I can't figure out how it could help me." Clarifies what you want to know.
The star (or flags; depends on the program) is a way to sort photos in the beginning stages and during an editing workflow for people who are dealing with large amounts of photos from the same event. You decide what the stars mean to you.

For instance: Let's say I shot 1500 photos at a milestone birthday party. I might decide one star means they have made the first round of "cuts" to be considered for editing. Images not worth editing get no star. Out of those 1500 I give 1000 a one star. 500 images were deemed to be blurry, poorly exposed, or virtual duplicates of another image that I gave a one star to.

But, 1000 images is still a LOT to edit to give to the birthday honoree or put in a scrapbook/photo album. So I go through them a second time, this time I will only look at the images that got a one star, and give two stars (round two)to ones I want to keep. Again I'll evaluate for technical issues but with a stricter standard of "good" than I had in round one, duplications of poses, maybe some weird facial expressions and just odd things you suddenly notice you didn't notice when you snapped the picture- like a disembodied arm reaching into the image or an overflowing trash can that isn't in a place that can be easily cropped or cloned out.

In round three I will only look at images that got two stars. Again, my standards for technically good photo gets stricter, I get stricter on what constitutes a duplication of images, I pay attention to the fact I only got 3 shots of Aunt Joan but 30 shots have annoying Uncle Herman in them. It is about this round that images that looked pretty good during the first round I realize aren't all the good.

Round four gets even more strict in evaluation and oddly it can be easier to critic as you get tired of looking at them AGAIN. And round four will be the ones I feel worth doing any editing work on. At this point I'm down to about 70-50 of the best images. Once I've done my editing work (even if it is minimal) It is on to the five star round where I will decide which of the images are worth actually sending to the printer.

For stuff I'm not shooting hundreds of images I don't bother with the star system. Or I just jump to 5 stars. I shot 50 photos at Grandma's birthday. It is pretty easy to identify which ones I want to edit and even print on the first look. Stars can be a useful way to filter down a group so you aren't wading through the entire folder every time you look at the images. But if you aren't in the habit of shooting hundreds of photos at the same event you may not find it overwhelming to look through them all so the stars may not be all that useful to you. Make sense?

I use the stars on an individual shoot basis.  My projects have been too widely different to ever want to do a pull from the entire library. 

I don't use Smart Albums.  I have a file system I prefer from the old days before all the new fangled smart albums and keywords. 
If you google smart albums and bridge you'll get quite a few hits from photobloggers explaining their preferences for smart album set ups.