What sets "top" universities apart from "mediocre" universities in continental europe? Every year rankings are published that list Oxford, Stanford and the like at the top, while many(most?) universities in continental europe share ranks well beyond 100. I myself am a Phd student at a technical university in Austria that is ranked somewhere beyond 300 and I don't quite understand what makes the difference.

Some things that occupy my mind:


Like my own many european universities are free to enroll, which means a lot of candidates and also unfortunately many drop-outs (especially in STEM), which affects the score negatively as I understand. I assume that top-universities, that rely heavily on expensive enrollment fees, take more action to keep their students. Am I correct in this assumption?
Do top universites have simply more money to make better research?
Are the people there actually much smarter? Is there a different mindset that leads to more/better research? A fellow student of mine who spent some time in the USA told me that the people there are not "more knowledgeable" than us here in our bad university but I don't know which university it was.


We do have a lot of satisfied business partners here so I don't think our research is "bad". On the other hand my kinsmen always say "those rankings are arbitrary bullshit anyway", and Austrians like to sugarcoat reality a lot. We often hear some self-praise about how our institutions are well regarded but then there are those rankings, wich makes me very doubtful.
I've only ever seen this small academic world of mine as I never had the chance to study abroad because of my family so I am hoping that someone who knows both sides can shed some light. Am I missing a chance to become so much more than I currently am because I'm at the wrong university?
To be honest, I don't much like the idea that some people suggest there are "mediocre" universities. Good research can be done just about anywhere in many fields. Caveat: Some fields require funding beyond what is available at other than the biggest, richest, universities. 

But there are several things that go into the rankings. I suspect that most of them are cumulative in some way. A lot of great research gets done at Oxbridge because of its size and history and attractiveness to scholars (and funders). Other schools don't have the same features. But the ranking is due as much to the quantity of good research as to the quality, as the quality can be good anywhere, but the resources available don't support as much of it. 

A larger university has an advantage since it can more easily support working groups that can collectively produce great research. A smaller place leaves its faculty more isolated (less true today than historically - but history is part of this) with less opportunity for sharing and synergy. 

Some of it is just luck over time. Good faculty attract good faculty. Researchers attract researchers. An older university, if well managed, has an advantage over a newer one. It takes time to build reputation. The magnetic attraction of a good place increases over time. Harvard University, like most others, had a modest beginning. Its founders would be unlikely to recognize what it has become. Certainly its mission is quite different than it was originally. 

A good reputation attracts students. Often it attracts far too many students. This lets such a place choose really good students who wind up having really good careers, adding to that reputation. And for some of those graduates it means wealth and for some of those, contributions back to their university. Harvard graduates tend to be pretty smart. But they were already judged to be pretty smart before they went to Harvard. Ubiquitous? Maybe. 

Resources matter a lot. Especially today, with a more mobile pool of researchers than was possible in the past. For example, Europe is largely without borders and the links between Europe and the Americas are strong. So people can go where there are other compatible people (and good funding). So reputation tends to build on reputation. 

But not every brilliant researcher or teacher wants to put up with the constant pressure of a "top" university, so it is possible to find that brilliance spread out. Just because you happen to be at an R2 or a teaching college doesn't make you mediocre. It can make you sane, actually. Hence my objection to the "mediocre" characterization.