My MCHN described it really well for me:

For example, if your baby was in the 50th percentile for weight:

If you put your baby in a room with 100 other babies all born on the same day, there would be 50 babies heavier than your baby and 49 babies lighter than your baby.

In Olivia's case, she is currently in the 5th percentile for height and weight, so in a room full of 100 babies, there would be 95 babies bigger and heavier and taller than her!!