In addition to standard rank bonuses there is also a bonus/penalty to engaging in fights against opponents outside your rank.
A 1 rank difference causes a ToR modifier of 2
A 2 rank difference causes a ToR modifier of 5
A 3 rank difference causes a ToR modifier of 10
A 4 rank difference causes a ToR modifier of 20
The Tyrrany of Rank modifier is applied to a few things:
Damage Dealt
Opposed Skill Checks
Resistance Rolls
Damage Dealt:
Any damage you deal before checking against your opponents DR. Thus wounding multipliers are applied after this modifier.
If a Bronze Rank Adventurer attacks a Silver Rank monster, their attack will suffer a -2 penalty to all damage dealt. Additionally the Monsters attacks against the Adventurers will receive a +2 bonus to their damage. With the level of Hp available in GURPS this isn't an insurmountable barrier, but it is a dangerous one.
However if those same adventurers attacked a Gold Rank monster, they would likely quickly be put down as a Gold Rank monster's attacks are likely to be more potent at that level even before considering the ToR modifier.
Opposed Skill Checks
Contests and Quick Contests against an opponent of a different rank apply the Tyrrany of Rank modifier to both participants skill rolls, dramatically skewing the outcome of the contest.
Resistance Rolls
Any affect manifest by a anything that applies to a target of a different rank that is allowed a resistance roll also has the Tyranny of Rank modifier apply to their roll to resist the effect.