This is how it works for NT/U21 (from the manual), I've always assumed it was the same for club teams:
Rankings
The world championships aren't the only way that national teams can compete for status. For every national team game that gets played, some number of ranking points get distributed between the participants. Even scrimmages are worth something, but the bigger the game, the more points get handed out. All ranking points that national teams receive, they keep for 28 weeks (i.e., two seasons). Points expire on a rolling basis.
The winning team gets a bigger share of the ranking points for a game, but it doesn't get all of them. Precisely how many points are received depends upon the relative strength of the two teams. If the teams are evenly matched, then the winning team will receive 75% of the points, and the losing team the other 25%. An underdog who scores an upset will get nearly 100%, but a strongly favored team that takes home a predictable victory will receive only a bare majority.
Although it's usually safe to assume that the team with more ranking points will be the one that we deem stronger, the two are not identical. We track teams' strength in a separate internal variable that we don't publish (so don't ask!). The algorithm we use is called Glicko-2 and is similar to the systems used by Baseball Prospectus and by the US Chess Federation. If you're interested in the gory details, click here, but the math might be scary. Don't complain that we didn't warn you.