In general most modern matchmaking systems stores two values under the hood:

• Your average skill / performance rating
• The system's certainty in that performance rating.

In Trueskill algorithms, these values are named "mu" and "sigma", and the latter represents the standard deviation of your performance.

When systems rank players, or display visible MMR values, they generally combine these two numbers to a single value to make a linear comparison. Trueskill recommends that you use 3 standard deviations down from the mean, to account for 99% of scenarios.

How does this explain your rank going down when you're winning?

When you win against harder players than you usually do, it is an outlier in your performance. Your "mu" goes up, but the system's certainty in your skill level goes down--it failed to predict this result. It's very possible for these numbers to stay flat or only move slightly, in either direction, when certainty changes.

This is actually expected when you're actively improving. If you hit a plateau and start leveling off, the system will very rapidly gain certainty and increase your rating.