Matchmaking by Skill Level

A lot of multiplayer games I play say they match up players by skill level. How is this usually done and what values are considered?

They usually use some form of an Elo system. However the values they use and specifics vary title by title.

The elo system is the rule, but it is a system designed for Chess players and doesn’t really fit online games.
The main reason why elo is used in games is because it is simple to develop and requires small data tracking.

In Mobas for example, a true “skill based” matchmaking, requires a lot more data to be compared; however the more data to compare the less matches are paired and the longer queue times your players get…
The longer queue time the less people play, thus designers choose to sacrifice parity in favor of shorter queue times which end up generating unbalanced and unpleasant ‘stomp’ match ups in every single Moba game out there.