In this paper, I discuss the results of word-likeness rating experiments with Hebrew and English speakers that show that language users use their grammar in a categorical and a gradient manner. In word-likeness rating tasks, subjects make the categorical distinction between grammatical and ungrammatical – they assign all grammatical forms equally high ratings and all ungrammatical forms equally low ratings. However, in comparative word-likeness tasks, subjects are forced to make distinctions between different grammatical or ungrammatical forms. In these experiments, they make finer gradient well-formedness distinctions. This poses a challenge on the one hand to standard derivational models of generative grammar, which can easily account for the categorical distinction between grammatical and ungrammatical, but have more difficulty with the gradient well-formedness distinctions. It also challenges models in which the categorical distinction between grammatical and ungrammatical does not exist, but in which an ungrammatical form is simply a form with very low probability. I show that the inherent comparative character of an OT grammar enables it to model both kinds of behaviors in a straightforward manner.