I think that when applying to highly selective schools, students are being directly compared to the students from both their own high school as well as to students from their region. I have heard this from admissions officers. However, it remains a complicated, mysterious, and yes, holistic process with no cut and dry rules.
My friend had a kid at a highly regarded private day school who had their heart set on Brown University. She heard that many other classmates applied there as well. When 2 athletes were recruited from their small class of around 120, the others figured that there was no chance of them getting in, because in ED Brown takes less than 750 students from all over the world. Brown took 5 kids from that small class ED, and 2 more regular decision, so you just never know how it will play out.