Chucky_1,
This is a quick one "off the top of my head" without reference to the books, so stand by for a better interpretation from other sources, John Tullamarine, where are you?
As you've mentioned CASA, I'll reply with their policy as stated to me by them 3 years ago which was when I last did an aircraft certification in Australia.
Maximum Crosswind Component is that which the manufacturer has determined is the most limiting, within the certification rules, as achievable for the aircraft.
The problem is that the Pilot's Operating Manual can only approve manoeuvres which have been actually demonstrated. Whilst the test pilot can "prove" values such as Vne, Vmo, Mmo etc. by flying there, crosswinds cannot be ordered.
Demonstrated Crosswind Component is the maximum which the manufacturer has test flown the aircraft to in the real world, and found it to be controllable. Therefore that is the limit which may be published in the Pilot's Operating Manual.
As a post script, I once flew an aircraft which had a demonstrated crosswind component of 37 knots, so that then became the limit, even though the manufacturer had determined that the aircraft would have been capable of a limit approaching 50 knots.
That's the 'blunt pencil' answer, standing by for much clearer 'sharp pencil' responses.
Regards,
Old Smokey