You're correct in that the "top 3%" represents the top 3% of the developers who actually applied to Toptal (about 11,000 from all over the world in the last couple months).

However, it's also important to know that the 3% was not arbitrary. We didn’t start by saying, “wow, we should set the acceptance rate at 3%, because that sounds nice” or we somehow knew that the bottom 97% were bad. 3% (and every value you see on our screening process) is simply the result of a numerator and a denominator (successful_applicants over all_applicants). We designed the process to be the bare minimum criteria for us to be extremely confident that we are admitting someone into the network who will thrive here.