Amazon has a system that where you can rate your music, book, and DVD purchases. Using this system is uses some logic that groups items and will send you recommendations based on what you like. I've rated thousands of items.
This system worked really great in the beginning. You would receive an email like "As someone who has rated Stephen King highly, you may be interested in pre-ordering his new book." That was fine, I often was interested in his new book. It was good. It usually seemed to stay with the same author so wasn't super useful if you kept up with your faves, but for more normal people who don't keep up on release dates and such it was probably useful.
A little later, the system started crossing product lines. "As someone who bought Sin City, you might be interested in the Sin City graphic novels." Again, this was good...it was something that might intrigue me. I was alerted to several books, comic books, DVDs, etc... that I was interested in. This was a little more useful than direct author match but still it was all pretty much direct matching of titles.
It then evolved and doing indirect matching - "As someone who likes JRR Tolkien, you might be interested in the Eragon series of books." OK, dragons, fantasy...it see the reasoning and it still made some sense. Many times it recommended something an author or a book that I would think "I do like that author/book...I forgot about them, let's see what else they have." I used this one a lot. I was always surprised at how accurate this system was with my tastes. I didn't read or buy everything it suggested, but I could tell most everything was pretty spot on.
Finally, it stretched it too far. "We noticed that people who purchased American Psycho DVD, also purchased Everybody Loves Raymond Complete Season 2." WTF? Really? I know they were released on the same day so there probably were a few people that ordered both...but I can't believe it was a statistically significant proportion. It seemed that more and more of the recommendations were becoming like this. I had to unsubscribe because they were just too ridiculous and actually made me angry.
Editors Note - these are not real examples (as I have long deleted all the emails) but examples fabricated to show a point (although they are very close to some actual recommendations that Amazon gave me).