"Think of it as a Most viewed for interesting content. It is a mixture of views, audience attention (how long the viewer watches) and ratings. Why promote content that people aren't enjoying even after they watch it? Unlike Most Viewed, if someone watches for 10 seconds ... and leaves, [Popular] will not reward the video."
In other words, it's one way to minimize the effect of gaming, in which users employ racy thumbnails or video titles to trick viewers into watching less than racy videos -- and the viewers quickly lose interest.