That’s easy, they list Minecraft servers :). But the idea behind them is actually a bit more complex. Minecraft server lists provide exposure and advertising for Minecraft servers so if you own Minecraft server it’s generally good idea to at least add it to some Minecraft server lists if not all.
Competition? Servers would them compete on such lists and that’s generally done by voting. Most of servers nowadays reward players for voting with ingame rewards, all players have to do is enter their username and solve captcha. That’s usually implemented with Minecraft plugin called Votifier, some servers use NuVotifier.
After that it’s easy peasy servers are simple sorted by number of votes they receive, tho some Minecraft server lists would use additional information to rank servers such as server age, number of online players, some lists would hide offline servers and so on, when it comes down to it each server lists would usually have their own way of rating Minecraft servers.
What do you have to do to list your Minecraft server?
It’s good idea to install and configure Votifier, that will give you your public key, after that all you have to do is add your server to the list and double check you’ve filled out all the info, it’s generally also good idea to actually test out Votifier plugin.