According to Morningstar's Factsheet for Funds, "The Morningstar Rating (TM) is a quantitative assessment of a fund's past performance--both return and risk--as measured from one to five stars."
Within the Morninstar.com "Funds" section, look for and click on a link for the "Using the Star Rating" PDF document, which was roughly in the middle of the webpage when accessed on November 18, 2007.