[Colonel Flagg]

3 points for a win, 1 point to each team involved in a draw, zero points (and a bitch slap) for a loss. Each team plays the other three teams in their group, and the top two point-getters in each group advance to knockout, or tournament-style play. In the event of a tie, most goals scored in the three matches is the first tie-breaker.

Each group was "pseudo-randomly chosen" - I think the 8 highest ranked teams in the world were each placed in groups A through H, with the remaining 24 teams being randomly placed.

As far as the FIFA world rankings work, you're better off having Ranny explain.