WARNING: The following article spoilers for One-Punch Man Chapter 120, by ONE and Yusuke Murata, available now in English from Viz Media.
In the One-Punch Man universe, the most powerful heroes belong to S-Class. The manga has made clear S-Class heroes are a cut above the rest, capable of performing feats even groups of A-Class heroes struggle with, like defeating certain monsters. However, One-Punch Man Chapter 120 reveals S-Class didn't always exist and, in fact, had to be created.
After Flashy Flash and Saitama come upon a monster using the toilet, Chapter 120 refocuses, instead, telling the history of the Hero Association. Initially, S-Class didn't exist, though A-, B- and C-Class remained. Ranks were determined by ability, popularity and contributions to society. However, this led to certain heroes banding together, essentially working together in order to achieve the best possible results.
Yet, at the same time, there were heroes capable of defeating those same monsters entirely on their own. The manga reveals Metal Bat, Superalloy Blackluster and many, many other powerful S-Class heroes were actually, under this system, much, much lower down in the ranking system. The Hero Association eventually realized the system didn't help it retain these ultra-powerful heroes since it didn't reward them properly for their work. In response, the Hero Association created S-Class -- which was made up of heroes equivalent to "one division of the nation's force for addressing emergencies."
One-Punch Man Chapter 120 ends, quite literally, in the middle of a sentence, teasing a powerful opponent against which S-Class heroes tested themselves. However, the story itself to this point establishes just why S-Class eventually became a ranking. There's also something of a parallel with Saitama's situation. Although the hero is beyond even the most powerful member of S-Class, Saitama isn't recognized for his abilities due to a broken system that privileged his test-taking ability over his raw attributes, which tested impossibly high. Still, in what has become one of the manga's running jokes, no one is able to recognize Saitama's power precisely because he is lower ranked, so there's something of a crystallization in terms of how S-Class functions and adds new members.
As One-Punch Man continues and Saitama's abilities are revealed more and more to the world, the Hero Association might just have to make another change to its structure to accommodate Caped Baldy, its most powerful member.
The next chapter of One-Punch Man in English releases April 8 from Viz Media.