Certification and Classification
In the UK there are 2 organisations responsible for the Age ratings we see on films and games. The BBFC (British Board of Film Classification) are responsible for films and the VSC (Video Standards Council) is responsible for games.
For Games the PEGI (Pan European Game Information) system is used. This system was created in 2003. It looks at the levels of Violence, Bad Language, Fear, Gambling, Sex, Drugs, and Discrimination in the game and then assigns the appropriate rating.
A full description of what each of the labels mean can be seen on the PEGI website here
The BBFC use a similar age classification system for films but with slightly more categories. To assign a classification they look at issues such as bad language, dangerous behaviour, discrimination, drugs, horror, nudity, sex, violence and sexual violence. They also consider context, tone and impact - how it makes the audience feel - and even the release format - for example, as DVDs, Blu-rays and VoD content are generally watched at home, there is a higher risk of under-age viewing.
More on the individual classifications can be found on their website here