Importance of grades when applying to Master's degree program? I am planning on applying to a Master's degree program (in Canada, if it matters) and I've noticed that there seems to be quite a few grade cut-offs for applications. I've read elsewhere that these are not set in stone, however, how important are they compared to other criteria such as references and research?

In my opinion, which I have no proof for, it seems almost absurd to put an emphasis on grades without knowing a class average or having a detailed knowledge of the course when examining a grade. However, this is my personal biased opinion, so I would like to see the rationale behind the opposite view. One argument I have heard is that school build up a database of GPAs from a certain school and classes (from the comments to this question), so I can see how this might be considered mildly accurate.

This is similar to this question, consequently if the response is similar, I will not be surprised. I'm applying to a researched focused engineering program, but a developed answer with respect to multiple faculties and multiple types of programs would be ideal.
Actually, admissions to master's degree programs are quite different than PhD admissions. Doctoral programs are research programs, and therefore promise as a researcher is perhaps the most important criterion of all to satisfy.

However, at the master's level, this may or may not be the case—many master's programs feature no research (purely coursework), or only a small amount of research (for instance, a one-semester research project, or a lab course, or something similar). In such cases, research is not emphasized nearly as much, and undergraduate track record takes on greater significance. Similarly, "terminal master's" programs—ones that represent "end degrees" in their own right—will likely have less of a research background focus than degrees that are intended to prepare a student for doctoral studies. 

The other issue is the style of admissions: for "US-style" admissions, research will likely be more important than it is in "European-style" admissions, where research plays essentially no role at all in admissions to master's programs (although research is a prerequisite for PhD studies!).