The rankings are based on the %age earned by the player against the average %age for the game. If there are more ranks then you can have narrower bands for each grade, so less variation over the course of the grade. As we have 4 ranks, S, A, B and C then it seems reasonable to assume that each rank represents 25% of players. (S for the top 25%, C for the bottom 25% etc.) By adding just one extra grade, the boundaries for each grade change so that instead each grade represents 20% of the players. So therefore the more grades there are available, the clearer your standing within the community. If, say, 4 more grades were added, then those receiving a 'G' would know that they were in the bottom 12.5% of players whereas at the moment those who would be in that band (and have 'C' ranks) only know that they are in the bottom 25% of players. Notice that under this system, the 'C' rank would apply to those who would have a low 'A' currently.

This assumes that the grades are allocated with an equal number of players per grade, but I trust you get my point

That doesn't quite work out the way you think. Say only one out of one hundred guys has a Platinum for a game. That S only represents 1% of the players. It's all dependent on everyone else's percentage, so you can't really generalize the amount of players to a letter grade.