The launch follows the recent introduction of "Tumblarity", a ranking method determined by a secret formula involving the number of followers you have, the number of posts you've made, the number of times someone has "liked" your posts, and the number of times you've been reblogged. As such, it's a bit more complex than, say, ranking Twitter users based on the number of followers they have: it's more akin to ranking them based on retweets.
Tumblr admits the addition is somewhat inspired by the Twitter ranking site WeFollow, and the wholly similar design would imply the same. It's likely a good move for Tumblr, which had previously been a fairly self-contained community: public popularity lists make it easier for new users to find interesting Tumblelogs.
The downside is that the most popular blog isn't necessarily the most interesting blog for you: personalized recommendations may one day be a better way to find the good stuff.