I'd say that this is probably not too good for those trying to find more music in an area they're already familiar with. Those trying to find music that they're not familiar with would probably benefit, though.
Yeah, I think they focused on breadth over depth when they developed this. As you get into lesser-known artists, the available data isn't going to extend deep enough to make a correlation. My guess is they used AllMusic.com's data for tying genres together, and possibly for other attributes.
If something like this was done Wiki-style where users could add their own artists and associations between them, it might be even more interesting (but of course subject to how knowledgeable the contributors are.)