No, it isn't like that. There are simple quest givers who hand out dumb quests. Fetch quests, go-n-kill quests, etc. These are there just to give you moderate equipment and level your character.

To get the high-end gear, you gather a party and go on a raid against a boss. Then there is a random drop of premium or epic quality and a bunch of other loot.

If you are raiding with a bunch of friends, you work out ahead of time who gets the top drop.

If you are raiding with strangers, usually someone is an asshole, grabs the premium drop, and quits the party, even if he barely helped in the fight.