In the most recent major version (9), they added a "Genius Mix" feature that supplements their earlier "Genius" feature that would generate playlists based on a selected song -- as long as they had enough information in their repository tied to their store to figure one out. This new feature goes through your library, and puts together 12 (at least for me) mixes.
Playing with this, I've found a "nice to have" to be added to this feature: A way to tell it to only search a given playlist. Since I keep a large collection of Christmas Music (866 songs, 2.1 days) this makes up a significant part of my overall music library (6115 songs, 20 days) -- about 14% of my titles are Christmas Songs or at least in my core Christmas playlist. So, I normally use my "Not Christmas" playlist as the basis of any other playlists I make.
But the Genius mix uses the full music library -- thus it keeps picking up Christmas songs (and more than 14% of the time for some reason).
Second, I wondering how it decides on the dozen mixes to create. For me it has created: "Christian (Worship) Mix," 2 different "Musical Mix," 3 different "Rock Mix," 3 different "Pop Mix," "New Age Mix," "Jazz Mix" and "Christian Mix." Each of these also list 3 artists who the mix is based on, so I'm pretty sure the mixes are distinct even when named about the same. So, clearly it is using what is on my library to determine the mix -- many people wouldn't have either a "Christian Mix" nor a "Musical Mix." But how is it figuring these out.
Third, and closely related, I'm wondering how it comes up with the terms, such as "Rock" and "Pop." Right now I'm listening to "Rock Mix" (not "Rock Mix (2)" or "Rock Mix (3)"), which is based on Simon and Garfunkel, Cat Stevens, John Denver & Others. The "Others" have included The Kingston Trio, Gordon Lightfoot, and James Taylor. I don't know if I'd classify any of them as "Rock." The Kingston Trio is usually considered a Folk group, and Simon and Garfunkel pretty much define "Folk Rock." The rest sit somewhere in the Folk Rock to Pop range (at least by my way of thinking). I'm also sure that few of these the songs I've heard have "Rock" in their genre, at least in my system. Of course what is in the iTunes store and central database is probably different.