Google has been updating and results are all over the map at times - but some of the results are a bit ridiculous. I just searched "reno real estate" and # 6 is the Reno Philharmonic Orchestra.

So I guess we should all be changing our keyword targeting accordingly

It looks like they are pulling sites up to the top to see how they perform. If a site is sticky and visitors don't run away they leave it up for a while to see if it out performs the site it replaced. If it out performs it's predecessor it gets to stay.

If people run away from the site then it goes back into oblivion. It is more important now than it ever was to have a sticky site. Your one and only chance might be getting ready to come up.

Hopefully, this is an attempt to gauge relevance through means other than back links.

Yes - one of the algo factors is how long you stay on a site after clicking through from a google search result. So high bounce rates are not good news for your rankings.

Yes they do use google analytics data that you give them!