As of 2015, information explaining the various grades of plywood is available from The Family Handyman, Popular Woodworking magazine and About.com. In the United States, there are four common softwood plywood grades: A, B, C and D. There is also a much less common fifth grade of plywood, known as C-plugged.
Each sheet of plywood comes with two grades, such as AC. The first letter corresponds to the grade of the face veneer, and the second letter is the grade of the back veneer. Some types of plywood may also have an X after the first two letters, which means that they are designed for exterior use.
Grade A is the highest grade of plywood. It means that the face has been sanded smooth and is paintable. Grade A plywood is usually free of knots and manufacturer repairs.
Grade B plywood usually has a solid surface with some manufacturer repairs, such as wood filler or patches. This grade of plywood may also have some minor splits and tight knots less than 1 inch in diameter with no missing wood.
Grade C plywood may have some small splits and discoloration. This grade can also have tight knots up to 1 1/2 inches and knotholes up to 1 inch. Grade D plywood, which is the lowest grade, may have some small splits, as well as knots and knotholes up to 2 1/2 inches. This grade usually doesn't have any manufacturer repairs.