1 to 10
1 to 10
Megan: On a scale of 1 to 10, how likely is it that this question is using Binary? Cueball: ...4? Megan: What's a 4?

The binary numeral system refers to a counting system in base-2, which uses only the digits 0 and 1, as opposed to the more familiar base-10 decimal system, which uses the digits 0 through 9. In this case, the scale of 1 to 10 is using binary, so in decimal it would be a scale of 1 to 2. Since 4 in binary is "100" it doesn't fit into the range "1" to "10" in a binary system. And Megan doesn't even know the number "4" because she's only working on the binary system, this character does not exist for her.
It is also possible that Megan is using base-3 or base-4, both of which don't have a 4 (base-3 counts 1, 2, 10, etc., and base 4 counts 1, 2, 3, 10 etc.)
It should be noted that if Megan is indeed speaking out loud in such a way that confuses Cueball, she would be saying "ten" out loud; this would automatically indicate she is indeed using base-10 (or higher). The correct pronunciation of "10" in base-2 is "one zero".
The title text uses a similar joke. Since test scores are usually written as either a letter grade or a percentage, 11 correct questions out of 100 would be a failing score in decimal notation. However, 11/100 in binary translates to 3/4 in decimal, which would be 75%, accepted in most classes as a 'C' grade.
It could also be argued that a score of 11 should count as a "B", as 11 is B in hexadecimal, however this link is a bit more tenuous, as the whole score would then be interpreted as "B/256".
Megan: On a scale of 1 to 10, how likely is it that this question is using Binary? Cueball: ...4? Megan: What's a 4?
