An algorithm is a set of finite, ordered steps for solving a mathematical problem. Each Search Engine uses a proprietary algorithm set to calculate the relevance of its indexed web pages to your particular query [link]. The result of this process is a list of sites ranked in the order of relevance as deemed by each particular search engine.

It is important to note:

Each search engine has a different algorithm that may weigh various factors differently.
Search engine algorithms are closely guarded in order to prevent exploitation of algorithmic results.
Search algorithms are also changed frequently to incorporate new data and improve relevancy.