populations-how do they work?

a particular coin is given a particular high grade(MS66 for example)by a grading service. Is this grade now submitted somewhere for records(the grading service by chance?) The coin is then cracked out to lets say sent in for a higher grade somewhere else, put in an album, etc and resubmitted to the original grading service. How does the population keep track of the correct number of coins and their grades(it would seem that there could be less coins than grades accounted for)?
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