Most yacht decks are a sandwich: two skins of fibreglass with balsa, foam or plywood between them. The core is light and stiff while it's dry. Water gets in where fittings are bolted through the deck and the sealant has failed, spreads through the core, and over the years the balsa or plywood rots and the skins part. The deck goes soft, and fittings bolted into it lose their hold.
How a surveyor finds it
Walking the deck finds the worst of it: soft or springy patches under foot, usually by stanchions, chainplates, the windlass and the mast. Then the hammer and the meter map it.
Sounding with a phenolic hammer gives a sharp note over sound core and a dull one where the skins have parted or the core has rotted. The moisture meter shows where the water is, but only as a comparison. Practical Sailor's tests make the limits clear: a meter reads about a quarter of an inch deep, gives no true moisture percentage in fibreglass, and a lot of water deep down can read the same as a little near the surface. Readings need a dry, uncoated surface and can't be trusted below freezing. Non-skid paint and a wet morning both make a dry deck look wet.
Last, the fittings. A chainplate or stanchion base that moves when loaded by hand means the core round it has gone.
What decides the grade
What the wet core is holding. Soft core round a chainplate, the mast step or a pulpit base is an A: the fitting can tear out under load. Wet core over an area that is still firm is a B, worth fixing before it softens and spreads. Slightly raised readings close round a stanchion base, with sound deck beyond, is a C: rebed the fitting and stop the water.