Rating on armor type items affects the armor value of that item.
On items with an Armoring modification slot, the Armor Rating stat of the Armoring modification sets the rating.
This is not to be confused with the character stat Armor Rating.
Rating on Weapon type items affects the minimum and maximum damage of that item.
On items with an Barrel or Hilt modification slot, the Weapon Damage/Power Rating stat of the Barrel or Hilt modification sets the rating.