Distrowatch's source for popularity is how often the different distros are clicked on on their own homepage... which has the toplist featured prominantly on the start page.

So their ranking completely and utterly worthless, as it's prone to manipulation and once you basically pushed your distro to the high spots it's guaranteed to stay there as a rarely used but highly rated distro is of course attracting more clicks from people wanting to know what it's actually about... see: MX Linux being on their #1 spot forever.