In Waterloo Engineering (and presumably other schools as well), they take your high school marks, add some adjustment factor for your extracurriculars and essays, and then pick the top N students.
In top US schools, they practice holistic admissions, which means they pick N students from the applicants, without specifying an explicit ranking system.
In the first case, an applicant can be relatively aware of where they stand based on the marks they apply with, and they know that the process used to select will be mostly transparent.
In the second case, from the applicant's perspective, it's pretty much a black box as to what the outcomes will be. When one of only 2 predictable parts (SAT scores and grades) are removed, I think it's understandable that there's some concern.
they consider you on a case by case basis and recommend/require that you take 5-6 grade 12 courses that you can take at a school or through distance learning. Other standardized tests like the Sat and ap exams are also recommended
One issue that's brought up is heterogeneity in high school grading practices, but somehow Canada manages. In any case, for "elite" schools, what has always helped the typical middle / upper-middle class applicants are AP scores (if you have a few) and of course SAT IIs as well.