The computer itself aims to understand language as we speak it with all of its "subtleties, irony, and words with multiple meanings." Scientists loaded the computer with 200 million pages of text that it then analyzes to understand speech patterns. So to play Jeopardy, the computer processes each question and then using cues like keywording and "statistical paraphrasing" to come up with an answer. It will only ring in to answer if it reaches a percentage of certainty that it has the correct answer.
While the computer won the practice round beating Jennings by $1,000, none of the three contestants answered a question incorrectly.