They will not be completely transparent about how it is done. But they used to give more info and said it was based on shelvings (read/to be read) with some eye toward number of ratings, and that it has to have an average of at least 3.5 stars.
So someone like Emily Henry (who will have 500,000+ ratings is likely to have even more shelvings) will get on the list before something with a higher average rating, but maybe only 50,000 shelvings.
It should be noted that when you enter a Goodreads giveaway they automatically add the book to your to be read shelf, so I think that also contributes to it. But it is very much what is popular (even if, it seems, it hasn’t actually been read).
The thing about browsing in a bookstore (or a library) is that you can’t actually see the cover unless it is on display. Most of the books I can only see the spine. So I guess I judge the book by the spine, or maybe the title? And when I have them home on my shelf, I am only seeing the spine so cover doesn’t really matter for most genres.
In romance, however, the cover is (was?) a way to determine what kind of romance book one could expect. For example, cartoon covers or bright colors with a single object indicate something different than the clinch covers, shirtless man covers, dark covers, covers with swords and raised lettering, etc. Then someone got involved and started putting cartoon covers on many types of ‘romance’ books which means I likely avoid books I would have liked because of the cover.