"Grading on the curve" means that the average score for a class becomes the middle grade, or perhaps a bit higher. If the average score in a class were 80, then that would be a mid grade, "C". A certain portion of scores above that would be a B and the highest scores would be an A. Similarly, if the average score on a test were to be 35, then that becomes a C.
Let's say the school offers 5 letter grades... A (the best), B, C, D, and F (fail). Each has a numerical score of 4, 3, 2, 1, and 0 respectively. If you obtain at least a D in every test or paper you are scored on, you will pass. If you get an F in one test and an A in another, you will pass.
It's a bit more complicated than that but not much. For example, you might have 2 major tests which count for 50 percent of your final grade, 8 minor tests which count 25 percent and your homework or projects which account for 25 percent. That is more or less up to the faculty to set the numbers.
Pass/fail courses are sometimes "gated". What this means is that historical averages are used. If a given course in the past had 75 percent of the people passing it, then the passing score this year will be adjusted so that 75 percent of the people pass the test. This is exactly what the Project Management Institute did when they revised their PMP test. The new PMP test was harder than the old. The pass rates dropped. The solution? Lower the number of correct questions until the pass rate returns to what it used to be.
I really wouldn't worry about it too much. If the pass/fail line is at 80 percent, and you've been doing your work, you'll also beat the 80 percent.