Google certainly has improved their "Similar" results. They used to depend on links alone, and many sites that weren't "similar" at all would be displayed. Now there's a much deeper intelligence showing through.
This whole area recently came to my attention because Company A's competitors are being displayed at the bottom of a search for [Company A], but there are no "Similar pages" being displayed for searches on the competing company names. It does seem like an inequity, but I don't know that I can do much about it.