Here is an explanation of "bucketing" given by llecs one of our moderators. It's much better than anything I could come up with since I'm still trying to understand the concept myself. 
I'm sure OP and others have seen this, but I use the college and bell curve analogy. Ever have that one professor who grades on a curve? If you take a test and you get an 80% on that test and if you have the best grade in the class, then under a bell curve-grading system, you have an "A". FICO scoring is similar. Your FICO is compared to everyone else's FICO in a dozen or so scorecards or buckets.
You can only be in one from what I understand, but if you have a major baddie, then you are compared, score-wise, to everyone else who has a major baddie. In other words, you aren't compared directly to someone who has a pristine report. Another example is length of history. It wouldn't be fair to compare two people in the same scorecard if one is 21 and has very little credit and the other is 60 with a 40 year history. Newbies are compared to newbies, folks with judgments are compared to others with the same, and so on. This is why Person X with no CCs sees a large increase when the first is added when compared to Person Y who sees a loss after adding his 15th. Or another example may be that you could lose points when the last baddie drops because your bucket changes and you are now being compared directly to others with better credit. You're low man on the totem pole, but in short time that score bounces back up.