How does Facebook pick friends on your profile?

[Nail]

It's mutual friends! Lets put it this way: (example)
You have a friend named Billy.
You also have a friend named Bob.
And another one name John.
Billy, Bob, and John are all friends with someone you may or may not know named Ben.
Since a few of your friends are friends with Ben, Facebook thinks that you may him, also.
So under Ben's name, it say '3 Mutual Friends' and the 3 mutual friends are Billy, Bob, and John.
Hope this helps and I hope you understand!