Competency is all about how well your character can use his or her skills and abilities. For most characters, d12 will represent the average ability level. Certain types of supernatural creatures may have a case for some abilities being a step lower or higher, species-wide, but on average, d12 is... well, the average.
This list shows both the dice and the 'points' for each competency. Points are used most often in determining how many times a thing can be struck before being destroyed. They are usually only applied to health and armour, though there may be cases for other devious and non-standard uses that your Storytellers haven't thought of, yet. In the case of armour, beneath the Health line of your character sheet, write a description of your armour, with the points beside it. In combat, your armour's points will be deducted before your health. In the case of health, add one point for the virtue of living.
You may see d6 and d4 rolls, from time to time, and the occasional character who is told they will not need to make a roll against a particular challenge. These decisions are made by the owners, Frostburn and Icefeather, in the first case, or by the Storyteller handling the current plot, in the latter. Because they are usually auto-success dice, d4 and d6 should not appear on your character sheet until you discuss your reason for having them, with one of the owners. For the purposes of describing your character, d30 through d8 can be distributed where you believe they belong.
Epic/Everlasting (D4) (+7)
This is the highest rung of competency, and it is generally reserved for those characters who are absolutely unique or singularly masterful at what they are doing. It is extremely rare to find a person with any ability at this rung. Skills of this magnitude could be described as unbelievable, grandmaster, superhuman, supernatural, or even godlike
In a fantasy setting, armour of this grade might be protection from on-high. In a sci-fi anthology this would be some unbelievable super technology. A character in everlasting armour is essentially immune to damage. Only an attack on an equally amazing level would be capable of getting through.
Genius/Extraordinary (D6) (+6)
This level is generally the highest that a "normal" human can achieve. At this rung, one may assume that there are only a small population of people with a similar trait. Einstein might have been on this rung of intellect, or perhaps Bobby Fischer would fit in here with his chess talents. An ability adjective at this rung might be termed as a master, astonishing, remarkable, amazing, stupendous, a prodigy, or unequalled.
Armour of this grade is likely either highly magical or extremely ultra tech. A character wearing this kind of armour is invulnerable to normal attacks and most special attacks as well. Armour of this kind is inaccessible to all but the fewest fortunate souls. (Read: You don't have it.)
Expert/Superior (D8) (+5)
This rung is where a typical "expert" would fit in. It is not uncommon to find a skill or two at this level for those people who are exceptionally practiced at their chosen profession or area of study. A few descriptive terms which work well at this level are expert, highly skilled, very good, highly accomplished, a natural, and elegant.
Armour of this type is the best kind a normal person could acquire, and it is only available to those with very impressive contacts and/or wealth. In fantasy settings this might include well-crafted, magical platemail, the kind reserved for kings. A character wearing such armour would be able to survive well against the majority of normal attacks.
Professional/High-Quality (D10) (+4)
This is the level of competence where those "good, but not particularly good" skills fall into. The typical person would have perhaps one skill (generally their profession) which would be at this rung. Abilities of this level could be described as professional, impressive, talented, skilled, proficient, or practiced.
Armour of this type would be given to elite troops or owned by nobles. In a fantasy setting this translates into full-plate or exquisitely crafted chainmail. Armour of this kind will keep its wearer alive against many physical threats, though it is not impregnable.
Decent/Decent (D12) (+3)
This rung is the "average" level, and it could be considered the norm against which the other rungs are compared. Generally, a person will have several of these skills, mostly in those mediocre abilities which everyone has a chance to pick up as they go through life. A few adjectives which fit well could be average, competent, fair, not bad, pretty good, decent, mediocre, and commonplace.
This is the sort of armour worn by most professional warriors. In a fantasy setting this is typically equivalent to a suit of chain or scalemail with bracers and perhaps a shield. Good armour provides solid protection, but it can certainly be bypassed by skill or force.
Amateur/Mediocre (D20) (+2)
A person could expect to be at this rung on any skill they have begun to practice but not quite mastered. The normal character would have a few of these, be they hobbies, or things they did a long time ago, or skills they just can't ever get the hang of. Some good descriptions of this rung could include below average, amateur, beginner, hobbyist, struggling, and unreliable.
Armour of this rung is generally the much less expensive version of "decent" armour. This might be studded leather or a full suit of lighter leather in a fantasy world. Though it is definitely better than nothing, this armour provides little more than shock absorbency; it typically won't turn blows or be much use against missile weapons.
Unskilled/Cheap (D30) (+1)
This rung is the bottom of the barrel, and usually it is only used for those abilities which are markedly horrible. Please note that everyone has almost every "skill" imaginable at this level of competency. (Even if you've never driven a car before in your life, that doesn't mean you couldn't try!) Skills here could be described as low, unskilled, incompetent, poor, crappy, nonexistent, or bungling.
Armour of this grade is the sort of thing worn by street thugs and athletes. It might provide protection in specific situations, but for the most part it will do little more than keep your elbows from getting scraped. In a fantasy setting this is perhaps equivalent to leather breeches and a pair of leather bracers.