How is the Rating calculated for entries in Gallery?

The Rating displayed is the Average of all the ratings received by the Entry.

Average of Star Rating is calculated as (Sum of all the ratings given by the users) / (Number of users who gave the ratings).

For example if 5 users have given ratings for an entry as given below -

User 1 - rated 5
User 2 - viewed the entry but did not vote
User 3 - rated 4
User 4 - rated 3
User 5 - viewed the entry but did not vote

Then Average Rating would be (5+4+3)/3 = 4. This is the value that is displayed against that entry in the report that is downloaded.