How Does Group Experience Work?
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All group experience is divided evenly amongst group members, if they are in the same level range. What's a level range? One color range. If everyone in the group cons yellow to each other (or high blue, or low orange), experience will be shared out exactly evenly, with no leftover points. How can you determine a color range? Simple - Level divided by ten plus one. So, to a level 40 player (40/10 + 1), 36-40 is yellow, 31-35 is blue, 26-30 is green, and 25-less is gray.
But a range like that is awfully narrow. Our 40th level friend will be grouping with more than just yellows, so what happens to the other colors? It's still divided exactly evenly (our highest level friend gets the same share he would have gotten if all his group mates were his level), but lower level group members only keep their experience up to their "experience cap," and the leftover points go away. (That cap, by the way, is defined as yellow + 10%, aka low orange, and applies to everyone - even solo artists.) In DAOC, anyone can group with anyone else and get experience. But for everyone in the group to get the maximum amount of experience possible, the encounter must be a challenge to the group.
But what's a challenge to the group? A good rule of thumb goes like this: If the group has two people, the monster must at least be (con) yellow to the highest level member. If the group has four people, the monster must at least be orange. If the group has eight, the monster must at least be red. There are exceptions (because the higher the level of the players, the wider the level range within a color is), but that's basically how it works. If an encounter is not challenging enough to the group, "challenge code" kicks in.
If "challenge code" has been activated, then the experience is divided roughly like so in a group of two (adjust the colors up if the group is bigger): If the monster was blue to the highest level player, each lower level group member will ROUGHLY receive experience as if they soloed a blue monster. Ditto for green. As everyone knows, a monster that cons gray to the highest level player will result in no exp for anyone. If the monster was high blue, challenge code may not kick in. It could also kick in if the monster is low yellow to the high level player, depending on the group strength of the pair.
It is not possible to say exactly where challenge code kicks in for several reasons. For one, the colors are just a convenient way to talk about monsters; "high blue" and "low blue" will vary from monster to monster. The formula given in the first paragraph only applies to players, although it does approximately work for monsters. For another thing, challenge code isn't an on-off thing - it slowly drops off throughout the range.
Again, everyone will hit their cap or thereabouts as long as the encounter was a challenge to the group.