Groups of data (e.g. wells of a plates) are normalized relative to a subset (e.g. some wells within that plate, e.g. negative control). For each group mean and standard deviation (or median and mad) are calculated for the selected subset. Based on these estimates, all data points of a group are normalized by applying this formula:
x.zscore = (x – mean(x[subset]))/sd(x[subset])
or
x.zscore = (x – median(x[subset]))/mad(x[subset])
Literature: Malo et al., Nat. Biotechnol. 24, 167-179 (2006)
Wikipedia: Z-score / Standard score