Matt Cutts doesn't give it all away, but he did write this excellent and easy to understand article named How does Google collect and rank results? I found this by way of a classic Gary Price blog entry at Search Engine Watch Blog named First Issue Of Google's Newsletter For Librarians Released.
Here is a snippet from the article;
Once we've made a list of documents and their scores, we take the documents with the highest scores as the best matches. Google does a little bit of extra work to try to show snippets – a few sentences – from each document that highlight the words that a user typed. Then we return the ranked URLs and the snippets to the user as results pages.