From the article, it's used to rank the relative skill of two players. It was created for chess, but I believe underpins most competitive ranking today including Xbox LIVE.
This is correct, and the equations in the movie were very much real. I thought it was funnily obvious when he called it "The algorithm for rating chess players", knowing what ELO was.
Ah, yes, my mistake. And I wonder how that copyright works... it seems as though these guys: http://digital.ipcprintservices.com/publication/?i=34502&... used the method for their project, although I don't think they made any money off of it. That article also describes Colley's matrix very well.
From the article, it's used to rank the relative skill of two players. It was created for chess, but I believe underpins most competitive ranking today including Xbox LIVE.