Cream is the most concentrated, fattiest, most desirable part of a batch of milk, and it tends to rise to the top. So the idiom cream of the crop refers to the best part of a batch.
The expression is several centuries old and is related, in meaning if not etymologically, to expressions like crème de la crème (meaning the best of the best). In several European languages cream is used to mean the most excellent part. In English we rarely use cream this way outside the phrase cream of the crop, but most English speakers would understand our meaning if we were to say, for instance, they were the cream of their graduating class.
A cheese-making team have proved they are the cream of the crop by scooping a top award. [Basingstoke Gazette]
The dichotomy of these two teams will make for two matchups that feature the cream of the crop and the bottom of the barrel. [NESN]
It had the best-trained, most-motivated employees in the business, and its top executives were considered the cream of the U.S. airline crop. [Portfolio.com]
The spin-off of the hugely successful “Top Chef” pits cream-of-the-crop pastry chefs against each other. [Metro]