ETA: corporate, we posted at the same time!
Over here hack classes would have to be one of the most popular events. Theres BIG competition. I think it originated in the UK, but now in Aus and NZ its kinda different.
You start on the 'ring' - open space marked with cones, and will walk, trot and canter at the judges discretion on a circle with the other horses in the class. Horses are to be presented well, well manered, good conformation/gaits and collected/on the bit. The judge will then pick his/her favourite 3 or 4, call them into the centre, everyone else will leave. A 'workout' is then ridden, which the judge makes up on the spot. The horse that is called in first will work out first, then the second, etc etc.
The workout will depend on the class level. (maiden, progressive, educated etc) and can involve just a simple walk, trot, canter, simple change, halt or more complicated things like a flying change, hand gallop, extended trot (or a few lenthened strides in the lower classes) etc etc.
Places are then given.
The problem with hacking is there is are no set guidelines to judge by. Its all up to the judges discretion and opinion. Because of this there can be a fair bit of descrimination sadly. I've never encountered the colour bias thing (my hackie is black) but I have heard a judge actually SAY they didnt like/wouldnt place a grey horse. (though, this was just a regular show, nothing big. Once you start going to higher shows there isnt as much of this... would probs still happen sometimes though)
Hacking is really all about the glamour. I've been out in progressive hack, my horse hadnt settled well and was so tense and wasnt working as well as he could have, looked great though! And was still placed 3rd. Then, went out into a dressage test, and got marked down so much simply because he wasnt relaxed. This was completly ignored in the hacking.
Im getting off track here
To the OP, keep at it! Keep improving, go to some dressage days (REALLY useful) Not all judges are so bias. And if you go out, ride an awesome workout, and are still market down and are placed below a less deserving horse, who cares, everyone else watching/riding has just seen what has happened and will notice.
(also, don't be afraid to ask the judge why you were placed below another horse. You can get some good feedback and the judge has to give you a reason)