Riot Games first released ranked mode in VALORANT during the closed beta. And since then there have been multiple changes made to the rank rating system following the official launch.
Until episode 2 the ranked system in VALORANT was really vague as there was no clear indication of exactly how much you gained in RP in your ranked match. After getting clear feedback from the VALORANT community, the devs at Riot Games finally decided to move away from that arrow system to actual numbers to indicate rank progress in episode 2.
There was also a lot of instability in the overall ranking system as sometimes it would highly demote or promote players in unpredictable ways. For example, some players would get heavily demoted following one bad match. This new system implemented in episode 2 is supposed to make the system more stable.
However, there was some confusion that still remained about exactly how your hidden MMR affects your rank rating. A Riot dev took a deep dive into exactly how your hidden MMR in conjunction with the new rank rating system works in the game to make the rank experience even better.
Hidden MMR explained by a dev
In short, episode 2 has made some crucial changes to give players who just had one bad game a buffer before a demotion, also made some changes that would let players climb in a more realistic manner when they have a really good match.
By giving players hidden MMR and then comparing it to their actual MMR this new system can more accurately predict your actual rank. The dev believes this is more healthy for the rank system in the long run.