Imposter finds a bunch of your Adium chat logs, picks the people you have talked to enough (they have sent you more than 100 messages) and generates putative messages from them based on Markov chain analysis on their previous messages.
See also: the Imposter site.
Imposter leafs through what your IM friends said previously and tries to generate what they will say next based on this.
Deal with it.
Yes.
Sometimes HTML or attachment payloads leak into the logs. I have not yet put in the effort to filter this out.
Other than that, I bet it's perfect.