I happen to notice that there is a gold star medal next to my station ID - what is the purpose of this? When I go to my weather underground station site.
First and foremost, it is a thing that some people love to hate with a passion.
Quite some years ago, I did a bit of investigating using my data and the coming and going of the medal. As result what I say may no longer to be current, and was only an opinion anyway.
It looks like that it does comparisons of only atmospheric pressure and temperature with other stations in the area. It does not use readings such as rainfall,etc. as they are too variable in an area. For example, I can have rain in my front yard, but none in the back yard as the cloud cells go by. If you live in an area that gets "non-average" temperature variations due to gully winds or similar, then you are more likely to lose the medal even though your weather station is reporting accurately. It also means that stations with clearly defective sensors may continue to receive a gold medal if there temp and pressure are good.
It appears to use an "averaged over time" comparison and It does not appear to be run in real-time. That is, the comparison of a block of results is only run periodically. This means that a medal may appear or disappear for no immediately apparent reason.
At other times, the gold medal appears to disappear from all the local stations (perhaps, everywhere?), only to reappear later for no obvious reason. I'm kind of inclined to think that WU does their development on the live system, but I'm probably just being unkind.