Seems pretty simple. When we create upper and lower boundaries to some score, people with lower scores have more space to overestimate and those with higher scores more space to underestimate, causing the perceived score to trend towards the mean.
I think there's both a component of numbers and psychology here. If the dispersion in perceived score caused by inaccuracy is wide enough to touch the bounds, it will force a trend towards the mean. This effect is possibly exacerbated by a tendency of perception to stray from "extremes", so subjects with a score near the edges will trend to the mean more strongly as they are unlikely to rate themselves the very best or very worst.
I think there's both a component of numbers and psychology here. If the dispersion in perceived score caused by inaccuracy is wide enough to touch the bounds, it will force a trend towards the mean. This effect is possibly exacerbated by a tendency of perception to stray from "extremes", so subjects with a score near the edges will trend to the mean more strongly as they are unlikely to rate themselves the very best or very worst.