The database creation script[1] has a lot of Unix junk in it, but reading through the comments and echo statements should give you an idea of what it does. The end result is a SQLite database with a size of about 9 GB which has four tables, the schema of which are described in the README[2]. The big things that are precomputed are redirects are "auto-followed" to reduce the total graph size and all incoming and outgoing links are stored in a |-separated string for each page (in the `links` table).
Every time a query is made, a bi-directional breadth-first search[3] is run which uses the |-separated incoming and outgoing links and runs a fairly standard BFS algorithm. A lot of the hard work was precomputed, which minimizes the number of required database queries and makes each search respond fairly quickly.
