Drop rate is defined as x of x-kills that yields a specific item.

An example:

You kill 200 ogres and get 100 Netherweave Cloth, then the droprate is equal to: 100 / 200 = 0.5 which is equal to a 50% droprate.

Another example:

An item has a 1% droprate from a specific mob, which means that, on average, one will drop for every 100 kills. This does not mean that it's guaranteed to drop by the time you've killed 100 mobs -- it's an average. It could drop the 10th kill or the 120th. 1% of people will get this item on the first kill, and another 1% (on average) of people who grind this drop will still not get it after 458 kills. If 1,000 players killed 300 of those mobs each, between all thousand players, there would be about three thousand drops. It is very likely that several [lucky] players have six or seven of the drops, while several different [unlucky] players could have none.

A calculator to determine how often you will have to kill a mob can be found here:

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