That’s the “Genius sidebar.” If you opt in to share your iTunes library (anonymously) with Apple, Genius will analyze your music and suggest playlists and other music that you may wish to purchase. This took a few minutes, but it found music on my system purchased from Amazon and Rhapsody as well as my iTunes music.
Let’s see the Genius sidebar in action. Here I’m playing music from the movie “Evita” and it’s suggesting Celine Dion, Rod Stewart, Olivia Newton John, Bruce Springsteen, Sonny and Cher, Whitney Houston, Barbara Streisand, Tina Turner, and other Madonna songs. I already have the Rod Stewart and Sonny and Cher songs in my library, and I have Eric Carmen’s version of “All by Myself” where they’re suggesting Celine Dion’s. Although I’m familiar with all the other artists suggested, there are no hits in this list that I would really want to purchase. (I'd like some other Springsteen, though.)