Google decided to extend personalized search to all users, even if they didn't sign up for Google search history. Google uses "information from Google Search History, Google Bookmarks and your personalized Google homepage, among other services that are tied to your Google Account. At this time, your Gmail and AdWords information will not be used to personalize your experience." The only way to see the "public" results is to sign out from your Google Account.
By using information from different Google services, search results could improve, because Google tries to infer your intentions by looking at your previous actions. "For instance for the query [bass], Google Personalized Search may show the user results about the instrument and not the fish if that person was a frequent Google searcher for music information."
User profiles are built from rough lines, as you can see by looking at Google's recommendations for pages, videos and gadgets. That means the targeting is still very imprecise and Google's assumptions could be way off. But this might help Google with word sense disambiguation: Google will pretend it understands something from your query.