Could someone please explain how iNaturalist determines that a species is vulnerable? Is it with reference to IUCN conservation status?
Many sources. Iucn is one. At a national or subnational level national Red lists or equivalent, NatureServe, legislative acts are other sources.
If you think a species information is wrong, flag the taxon for curation. I include links to an external status page in my flags.
A note - some common species may designated as vulnerable in other areas. I have encountered this a number of times with Canadian moths which are at their theoretical northern limit.