Here's how it works.  As you type Google looks at what you type and starts building a word list that is related to what you are providing.  For instance, when I type "Madison" I get "Madison Square Garden" and "Madison Public Library" and so forth.  You get the idea.

What is really interesting -- again, I should get a life here -- is the number links that each of the suggested search term has behind it.  As an example, "Madison Square Garden" has about the same number of entries as "Madison Weather." 

This makes for just one more interesting toy on Google - the Web's playground.