I think adcoms are well aware of grading standards at schools where they regularly admit students from (BTW, going back a few posts, Pepperdine has some of the most out of control grade inflation around, but I agree that 9s and 10s abound...anyhow...). There are definitely schools that are known to be ruthless graders (UCLA, Berkeley, MIT come to mind).
When talking about the big public schools, you really need to differentiate between "just big" and "big and good". For example, Michigan is really big, but it's also really well respected. Michigan, Virginia, Berkeley, UCLA and possibly North Carolina and Texas make up the public elite. Students from these schools regularly get into top graduate programs all around the country. They can be distinguished from other schools that are just big, like Ohio State, Penn State, Michigan State, Tennessee, Kentucky, Oklahoma, etc...
As has been discussed many times before, schools with national pull are the 4-6 public elite schools from above, ivys, the big names you know and love like Stanford, MIT, Duke, etc., a handful of top liberal arts colleges, and for the purposes of business school, the miliary academies (don't find as many of these folks in law, and probably not med either). A majority of your classmates at any E/UE school will come from these two or three dozen places. Not 90% or anything, but definitely more common than not. The rest of your classmates will come from one of the other 3,000 colleges in the US (I'm just talking about US here, too hard to think about global).
So, as Kidderek pointed out, it does in fact get tougher if you're not at one of those regular feeders. Is it because of the impact of school name and reputation? Probably. Is it because those three dozen schools draw the cream of the crop, and there are just more quality candidates? Probably. Is it because a school's brand will be bolstered by having a lot of students with elite backgrounds? Probably. Yes, those things probably all play into it.
But, of course, lots of others are admitted as well. First, most schools do have some sort of regional affinity. At Darden, for example, there are quite a few people from William and Mary. I understand it's a well regarded school in the mid-atlantic region, and it's supposed to be pretty challenging academically. I knew nothing about it before getting to Darden and I'm pretty sure that W&M grads do not share the same reputation at other schools around the nation. The same was true at Michigan Law School. In my class, if I recall correctly, Michigan State was the 3rd most common undergraduate school, behind only Michigan and Harvard, but this doesn't suggest that Michigan State is the 3rd best college in the country. There are quite a few schools that enjoy strong academic reputations in their regions; the other UC's, UW (U-dub as in Washington) and Illinois come to mind.
Beyond that, a lesser undergrad background can be overcome with top grades. If you start flipping through b-school resume books and such, it will be quite clear that most of the folks from schools outside the 2-3 dozen national names and top regional schools (in a given region of course) have lots of latin and greek words after their degrees, like magna, summa, phi, beta & kappa, not to mention dean's list, valedictorian, and things like that. It truly is the exception to find someone from an average school with only average grades.