A: Super-high production values, cutting-edge tech. Everything professionally voice-acted, lots of slick animations, graphics at least "XBox 360 level" if not pushing it, polished gameplay, (relatively) bug-free on release. Examples: Oblivion, Mass Effect 2, Fallout 3.
B: Midrange production values. Graphics at "PlayStation 2 level." At least partially voice acted. Fewer and often cruder animations. Good, individual art direction and music. At worst, this is a B-grade copy of an AAA title; at best, it adds personality, story, or gameplay elements that distinguish it and, occasionally, elevate it above AAA titles. Often somewhat buggy on release. Examples: The Witcher, Gothic 3, VtM: Bloodlines, Sacred 1 & 2. (I think Iron Tower's games will fall into this category too, if they ever get around to releasing something anyway.)
C: Screw production values, content is where it's at. These are either much narrower in scope than A or B titles, or much cruder in production values. Graphics are often utilitarian, designed to communicate content rather than establish atmosphere or look good. However, these games can take creative risks: they have unique gameplay, great writing, contain themes or settings that are too hard to digest for the mass market, and so on. Examples: Dwarf Fortress, The Path*, Spiderweb's games, Eschalon.
*Production values are fully B class; instead, the game is very very narrowly scoped in terms of gameplay and content, and therefore succeeds brilliantly.