Right now the "similar books" thing is based on a "topic-model"...
So books are more likely to be similar if they're roughly in the same genre and discuss similar kinds of topics (dragons, computers, romance, spies, war, shopping, time-travel, magic, hunting, etc).
Someday I hope the "similar books" feature will be a bit more sophisticated, where other kinds of "similarity" will also be relevant, beyond just the topic-model... Other things like: story structure, narrative voice, irony, vocabulary, sense-of-humor, lyricisim, etc...
I threw a curveball at it: http://prosecraft.io/library/mark-z-danielewski/house-of-lea...
It would be interesting to see if Prosecraft would ever correlate "similar books" with Borges since Danielewski said that was an influence.