What do you say when people ask how good at chess you are ?

I tell them that I am not really good and all I do is run wild with all my pieces

The truth! 

By most people's standards I am brilliant at chess. By the standards of people that play really well I am rubbish.

I say let's play a game of chess to find out ^-^. I do not know what average is but I think I am average maybe little better when I am happy and concentrated

Can you handle the truth?

"I'm good at chess"

I usually say this --

"Well, I guess I play OK sometimes ...... but, If I'd ever actually Studied the game, I could have been Somebody! ... I coulda had Class -- I coulda been a Contender! --- instead of bum, which is what I am.... let's face it ... it was You, Charlie......"   and they usually start walking away at that point, unless they happen to be named Charlie.

I think it's a question of how best to describe the truth to someone who doesn't know anything about chess, to whom 'my rating is xxxx' means nothing.

I would answer:

This is  very complex question.  I've been playing chess for 45 years so you could say I'm an experienced player. I've played in Mexico, Cuba, Europe, Canada and the US.  So, you could say I'm an international player.  I've played GMs.  I teach chess, so you could say I'm a chess teacher.  I love the game so you could say I'm an aficionado.  Now, as to how good I am, compared to whom?  It is reletive.  Would you like to play a game or two?  And after the game(s), I would complement my opponent. If he or she lost the game very badly, I would offer to teach or play again.  If he won easily, I would say: "There you go, now you know that you are a stronger player than me..." And I would ask him :" Are you a good player?"

Agree. Even if you've not heard of chess you can explain the scale is essentially 1-3000 and I am rated X. Not so complex unless you are trying to make it so. 

put your hands up

they're playing my song

the butterflies fly away

Not really because 1-3000 doesn't explain

A) The curve of distribution

B) How it gets exponentially more difficult to increase your rating as it goes up

So to say e.g. I am 2000 out of a maximum of 3000 doesn't say that much. 

I sometimes give my national ranking (46 last I checked) as this gives some context.

After someone new learns how the pieces move, i tell them: "Congratulations, youre now better than billions of people"  That always seems to motivate them.

You could go on and on I'm sure. I think 2K out of 3K says something, at least it is a place to start. 

And then there is the question of being modest, humble... I once saw a movie called The Man Named Friday (a Robinson Crusoe story according to Friday's perspective). In one episode, Robinson challenges Friday to a race. After the race where Robinson arrived at the finish line first and claimed he won, Friday replies that actually he won.  A discission ensues and Friday explains that while Robinson was all tense and grimacing during the race, Friday was gracweful, relaxed, smiling and truly enjoying the run - therefore he indeed ran the better race. So, if you feel good, you enjoy the game, you learn a lot from your mistakes, share your love of the game, and do your best -then you are good, regardless of your rating or the amount of victories vs defeats. 

Very well said!

Well, if that's the percentile of everyone who knows how the bits move, most of us would be in the top 1% probably. Percentile of tournament players perhaps, if there's any way of working that out.