Let me give you some examples and see if it clears things up (others can correct me if I'm wrong). This is what was told to me at VA and my physician.
DoD rating is typically lower. That is because DoD rating is only for your referred condition. For example: Let's say you were in battle and injured your left knee to a point where your physician feels that you should be sent to a medical board. At the medical board, they feel that you're unfit to continue thus sending it up to IPEB. During the process, you go get your medical evaluation where they find that you lost some of your hearing, you also have back issues, few scars, etc. When you're found unfit, VA will give you two ratings; one rating for your knee and another for everything combined. DoD will then take the VA rating for your knee and determine if you are medically separating (less than 30%), or if you'll be on either PDRL or TDRL.
Now, going back to square one, let's say that your knee problem also caused problems to your right knee and back pain along with PTSD because of the event. It is at that point you decide to go to see your physician and he sends it up to Med Board and so on and so forth. Because your initial referred conditions are right knee, left knee, back pain, and PTSD, those are what will determine your percentage for DoD when found unfit.
To understand the percentage and how it adds up:
You will start your military career at 100% fit. When they begin to rate you, each individual issues will have their own rating (there's a whole instruction for ratings that they use). Let's say problem A is rated at 20%, problem B is rated at 10%, and problem C is rated at 10%. Problem A will be rated from 100%, thus making you 80% fit. Problem B will be rated from the 80% (10% of 80% is 8%), so you'll now be at 72% fit (But I heard they round up, but for argument sake, it's keep it where it's at, and at whole numbers). Problem C will be rated from 72% (10% of 72% is 7.2%), so you'll now be at 65% fit or 35% disabled.
To my understanding, DoD does not do any of the rating. They just take what VA rated you as and go with that.
If I made any mistakes or anyone else can make this better, feel free do fix it or what not.