It should be reading the pressure in the reservoir. There's a bladder in the reservoir that's surrounded by air pressure. This is what regulates your house water pressure, keeping it from spiking every time the well pump turns on. You can check it with a tire pressure gauge. Somewhere on top should be a schrader valve. You should have around 30psi, I believe. I'm afraid what you're going to find, though, is that the bladder has ruptured and you're just reading well pump pressure. When mine failed, the pump would short-cycle because the pressure in the tank would drop as soon as you turned on the water, since there was no air cushion keeping it constant. When it would kick on, the pressure would spike dramatically. Like, stinging needles in the shower high.
Turn off the pump at the box and see if it drops pressure when you turn on the water. If it holds steady pegged, but you don't have abnormally high pressure at the faucet, I'd check the gauge like Jeff said. If it drops quickly, it's likely a ruptured bladder and you need to replace the reservoir. And do it quickly. The added pressure from the pump can cause major plumbing failures.
