Yes, what they do is they look at the mean/average of the raw internal marks and compare this with the average of the HSC exam marks of the cohort. If the raw internal is lower, they raise it, and vice versa. Generally, all moderated assessment marks are contained within the bounds of the highest/lowest exam marks - the highest exam mark is given to the first ranked student for their moderated assessment mark, and vice versa for the last ranked student.
To determine each student's individual moderated assessment mark, they look at how much they deviate from each other student and raise/lower these marks to proportionally fit between the highest/lowest exam marks. The differences between students' marks are proportionally the same, so they do reflect your school assessment performance. If the average of the newly adjusted marks still differ then the tails might be raised/lowered to accomodate the difference.
So the individual performance at school is very important, the individual performance in the HSC is important to determine the highest/lowest exam marks and the average of the marks. The higher the average, the better the marks can be for determine the moderated assessment marks. Individual rankings are not important, it's the difference in marks that matter.