The Genius feature is all about music discovery. Select a song you like, and Genius will create a playlist. It will also whip you up genre-specific mixes. Want new music? Genius has suggestions -- which, of course, you can buy in the iTunes Music Store.
Genius works so well because it makes use of a large data set: It scans the libraries of all iTunes users to make its recommendations. Users have speculated for years about the specific algorithms that make Genius' magic.