They are not saying so explicitly this year but going by past years, it is related by total number of shelvings (reviews, ratings but also to-be-read shelving, but not sure if they all count the same. You can see to be read intentions in the book statistic pages).

There used to be a cut-off "Opening round official nominees must have an average rating of 3.50 or higher at the time of launch. " though that was meaningless, it was really unlikely a book already rated less than 3.5 at time of launch was so unless it was by review bombing. It is thought they remove books with a “low” rating at time of compilling the finalists https://www.reddit.com/r/Fantasy/comments/yz3r4k/yet_another_post_overanalyzing_how_goodreads/ but it is surely higher than 3.5 and they do not say so explicitly.

It used to be people could nominate books, but oh well, there were organized campaigns, and that is over.

Interesting detail: one book released on Tuesday made Tuesday’s list, the final cut-off for nominated books (and might even win its category), it was Martha Wells new Murderbot book https://www.goodreads.com/book/stats?id=65211701. Not sure if its publisher, Tor, was not gaming for that, since it was giving out (uncharacteristically for them) lots of Arcs of it. It has only 500+ reviews, but 36k want-to-read shelvings (it was out two days ago only…)