My ds's school made it very clear that prizes were for effort and progress. Quite rightly, my ds didn't get them very often, despite frequently being "top of the class"
I disagree with that. It should be for all three.
Effort, progress, achievement
Actually, I agree with effort and progress, not necessarily achievement. I was "top of the class", I had my grades for university, I knew things were going well. I worked really hard but it wasn't a battle for me. I liked studying, so I was already happy, I didn't need anything more. My teachers were happy with me and made that clear, that's all I needed for feedback! For some students it's harder, for lots of reasons, those are the students who I think can benefit the most from encouragement and recognition of awards.
Other students who are perhaps not sure that they are good enough, or don't feel as good as others, when really they all are, can have a huge boost and encouragement to continue on by being included, recognised and told well done.
Meanwhile there are students who may be in very difficult situations at home, making everything so much more difficult for them. If they manage to get to school, study and get through the exams, I think that deserves recognition and supportive response from school, saying well done, we know what you go through to do this and we are impressed. Teachers have discretion for outside of school situations others don't know about, they can recognise this through effort awards without sharing private details but still supporting the students and I believe this is important.
I'm way more impressed with students who have to struggle to get the lowest grades just to pass, working hard, when students all around them comfortably getting better grades and managing the emotions that come with that. Or students who are managing all sorts of challenges outside of studies.