The percentile rank of a score is percentage of total scores from the normative sample that were equal or lesser than the value of the score. It can be plotted on the bell curve of a normal distribution. 

For example, in most standardized tests, a standard score of 100 is at the 50th percentile, meaning that a standard score of 100 is equal to or greater than 50% of the scores obtained in the normative sample. It is not equal to the percentage correct on the test. This is important to note because the two measures are sometimes confused. For example, while 38% correct on a school test would be unacceptable and considered a failing grade, the 38th percentile is within 1 standard deviation of the mean. A standard score falling within 1 standard deviation of the mean is considered to be typically developing. Percentile ranks are important to understand because they are directly comparing the child being evaluated to the normative sample. However, a child should only be compared to his or her own speech community. Unless the normative sample represents the child’s speech community, it is not valid to compare the child’s performance to those of the normative sample.

Age-equivalency is derived from the median raw score that children of a certain age in the normative sample achieved. So if the median score for 3-year-olds was a raw score of 68, this score would be used as the age-equivalency for 3-year-olds. If a 4-year-old receives a raw score of 68, his age equivalency would be 3 years old. These types of scores are often very misleading though because this does not mean the child is functioning at the level of a 3-year-old. Since 68 is the median score, it is necessary that children will score above and below without being outside of normal limits. In other words, a typically developing child could achieve an age-equivalency indicating a delay in development because the age is less than the child’s chronological age while scoring within normal limits for his age. As a result, New York City policy says they should not be used due to their misleading nature. Additionally, even test designers recognize and advise against using age-equivalencies (See Pearson Assessments Document):

“Because of the inherent psychometric problems associated with age and grade equivalents that seriously limit their reliability and validity, these scores should not be used for making diagnostic or placement decisions” (Bracken, 1988; Reynolds, 1981).

References: 

Bracken, P. (1998). Trauma and the age of postmodernity: a hermemeutic approach to post traumatic anxiety (Doctoral dissertation, University of Warwick).

Reynolds, C. R., & Paget, K. D. (1981). Factor analysis of the revised Children’s Manifest Anxiety Scale for blacks, whites, males, and females with a national normative sample. Journal of Consulting and Clinical Psychology49(3), 352.

Zimmerman, I. L., Steiner, V. G., & Pond, R. E. (2002). PLS-IV: Preschool Language Scale Fourth Edition: Examiner’s manual. San Antonio, TX: The Psychological Corporation, 33.