It's based on novelty; significant occurrences either in relation to technology or social matters (historical events). We were just discussing this a little bit the other day in the 'Time' thread in the advanced forum..starting on page 14.
Here's a video of him discussing the graph http://www.youtube.com/watch?v=O09_nU9L3LA
Here's a video of him discussing the graph http://www.youtube.com/watch?v=O09_nU9L3LA