Article What is the difference between Related / Recommended content, and how do they work?

Related Content uses Solr's MoreLikeThis to determine what should be displayed.  Recommended Content looks at ratings (Likes, Bookmarks and Subscriptions} to find content to recommend. For example: you rate blog post A 5 stars, another user rates both Blog Post A and Blog Post B with 5 stars.  You have never viewed Blog Post B so its recommended to you. 

If you have access to the community database (and sql management studio or equivalent) you could take a look at the te_Recommendations_Content_RecalculateAll and te_Recommendations_User_RecalculateAll to get a better idea of how exactly the Recommended Content and Users are determined.