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This occurs when your grade Category is configured to drop the lowest score, and you Grades settings are configured to ignore ungraded items. Because there is only one grade in the category, it is now the lowest score so all grades in that item are flagged as "Dropped." Once you grade additional items in that category the Dropped flag will update to reflect the lowest grade for that student.

If you want, you can remove the "Drop the Lowest" grade option and add it back later, after you have graded additional items in that category to avoid confusion.