For those new to collecting coins, there is a lot of jargon to cope with.
In particular, the grading terms and acronyms used by dealers and sellers are very esoteric, and don't bear much relation to normal English usage. (You will commonly see MS, AU, EF, VF, VG, G and AG without further explanation in online auction coin descriptions). Below is a basic explanatory list of some of the coin grading terms you may see, taken from the helpful eBay Coin Buying guide.
Yes, a coin worn all over is officially described as 'extremely fine', and a 'very good' coin is worn almost smooth....
Mint State Perfect Uncirculated (MS-70): The highest quality available for an uncirculated coin. The coin has no blemishes or scratches on its surface.
Choice Uncirculated (MS-65): An above average, uncirculated coin with occasional bag marks on the surface.
Uncirculated (MS-60): A moderate number of bag marks or edge nicks or marks may be present on the uncirculated coin.
About Uncirculated (AU-50): A moderate amount of wear is present on the high points of an uncirculated coin.
Extremely Fine (EF-40):Circulated coin shows wear all over, but details are still distinct.
Very Fine (VF-20): Circulated coin that has average wear present on details (such as hair and leaves) as well as on high areas. Major details are clear.
Very Good (VG-8): Worn circulated coin that still has visible rims. Most fine details are worn almost smooth.
Good (G-4): Circulated coin very worn overall. Major details are still visible, but faint in some areas.
About Good (AG-3): Heavily worn circulated coin with parts of date, lettering, and legends worn smooth.
For more information, here is an article which goes into coin grading in much more detail. There used to be only two grades, new and used!
More about coin grades
The useful guide below which gives more detail of the numerical values used in grading coins was posted on the goldismoney forum here. The thread was about how the price of precious metal may affect numismatic premiums.
PO: Poor - 1
PO-1: A coin with all the detail worn away. But it will have a date that can be identified and enough detail to figure out what type of coin it is.
FR: Fair - 2
FR-2: A coin that meets the description of PO-1 but has some details showing.
AG: About Good - 3
AG-3: A coin that has its rim and readable letters, although they are pretty worn down.
G: Good - 4-6 Common gradients are 4 and 6.
G-6: A coin that has slightly warn rim, details although worn flat, and peripheral letters almost full will be a G-4. If the coin has full peripheral letters the coin will grade as G-6.
VG: Very Good - 7-10 common gradients are 8 and 10.
VG-8: A coin that has its design worn but still has minor details remaining.
VG-10: Slightly more detail than VG-8.
F: Fine - 11-19 common numerical gradients are 12 and 15.
F-12: When the letters are still sharp in detail and there is still detail in the coin but in the lower areas on the coin.
F-15: if there is a little more detail in the low-lying areas of the coin PCGS will give this grade
VF: Very Fine - 20-39 common numerical gradients are 20, 30, 35.
VF-20: When all the letters are sharp and all there and there is some definition of detail in the coin and not just the low areas.
VF-25: Again, If there is slightly more detail the coin.
VF-30: If there is almost full detail in the flat areas.
VF-35: when the coin has full detail but the high points are worn flat.
EF: Extremely Fine - (XF or EF) 40-49 common numerical gradients are 40 and 45.
EF-40: when most of the detail on the coin is full and most of the high points are only partially flat.
EF-45: is the same except only a few of the high points are flat.
AU: About Uncirculated - 50-59 common numerical gradients are 50, 53, 55, and 58.
AU-50: defined as a coin that has only minor flatness on the high points of the coin and friction over most of the coin's surface.
AU-53: is the same but with friction only on half of the coin and a little less flatness.
AU-55: there is friction on less than half of the coins surface and very slight flatness.
AU-58: there is only slight friction in the high points of the coin. There must also be full detail on the coin to be graded as any state of AU.
MS: Mint State - 60-70
MS-60: a coin that has no wear whatsoever, with many heavy marks or hairline scratches and it might not be fully struck with hall the detail.
MS-61: is the same but with a few less scratches.
MS-62: is slightly less marks on the coin then MS-61.
MS-63: is a moderate number of marks on a moderate size.
MS-64: is few marks or a couple of severe ones, with an average strike.
MS-70: is the highest grade a coin can get, only a few every year ever get this grade. In order to get this grade the coin must have received the full strike of the coin and must be in the same condition that it was struck in. it must have no wear or contact marks anywhere on the coin.