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From the USDA site...it is mostly about marbling

Buying Beef
Regardless of their quality grade, some cuts of meat are naturally more tender than others. Cuts from the less-used muscles along the back of the animal -- the rib and loin sections -- will always be more tender than those from the more active muscles such as the shoulder, flank, and leg.

Since the most tender cuts make up only a small proportion of a beef or lamb carcass, they are in greatest demand and usually command a higher price than other cuts.

Each USDA beef quality grade is a measure of a distinct level of quality -- and it takes eight grades to span the range. They are USDA Prime, Choice, Select, Standard, Commercial, Utility, Cutter, and Canner.

USDA Prime, Choice, Select, and Standard grades come from younger beef. The highest grade, USDA Prime, is used mostly by hotels and restaurants, but a small amount is sold at retail markets. The grade most widely sold at retail is USDA Choice. However, consumer preference for leaner beef has increased the popularity of the Select grade of beef. Select grade can now be found at most meat counters.

Standard and Commercial grade beef frequently is sold as ungraded or as "brand name" meat.

The three lower grades -- USDA Utility, Cutter, and Canner -- are seldom, if ever, sold at retail but are used instead to make ground beef and manufactured meat items such as frankfurters.

Following are photographs of rib steaks in the top three beef grades, together with a description of the level of quality that can be expected in each of these grades.

USDA Prime: Prime grade beef is the ultimate in tenderness, juiciness, and flavor. It has abundant marbling -- flecks of fat within the lean -- which enhances both flavor and juiciness. Prime roasts and steaks are unexcelled for dry-heat cooking (roasting and broiling).