Grade addresses only centering and (for used stamps) cancellation. Condition refers to factors other than grade that affect a stamp’s desirability.
Factors that can increase the value of a stamp include exceptionally wide margins, particularly fresh color, the presence of selvage, and plate or die varieties. Unusual cancels on used stamps (particularly those of the 19th century) can greatly enhance their value as well.
Factors other than faults that decrease the value of a stamp include loss of original gum, regumming, a hinge remnant or foreign object adhering to the gum, natural inclusions, straight edges, and markings or notations applied by collectors or dealers.
Faults include missing pieces, tears, pin or other holes, surface scuffs, thin spots, creases, toning, short or pulled perforations, clipped perforations, oxidation or other forms of color changelings, soiling, stains, and such man-made changes as reperforations or the chemical removal or lightening of a cancellation.