Using margin of victory and Pythagorean wins, we determine which teams are better than their records suggest and which are worse.
A team's win-loss record is not always the best indicator of how good or bad said team really is. Simple wins and losses don't actually tell all that much of the story, paying no mind to important factors like margin of victory (MOV), offensive efficiency, defensive efficiency, clutch performance, strength of schedule, and so on.
Pythagorean expectation is a concept developed by baseball statistician Bill James as a way to get a more complete picture of a team's performance than by simply going off win-loss record.