As far as I have understood, the algorithm goes approximately this way
(Nathan, please correct me if I say anything wrong):

  The lighting values of the radiosity calculations are stored in a spatial
tree.
  When the lighting of a certain point is calculated povray first looks if
the point is close enough to a point in that spatial tree. If it is, then
it just takes some closest points in the tree (I think that the number
is specified with 'nearest_count') and calculates a weighted average of
their illumination values.
  If there isn't any point close enough, then it shoots lots of rays
in every direction (well, not in every direction but only through the
hemisphere which is defined by the surface normal vector). If the recursion
level is 1, then it just takes those values the rays hit. If the recursion
level is higher than 1, then it performs this same algorithm for each
intersection point.

  At the beginning the spatial tree is empty and thus the first rays will
take pretty long to calculate, but as the tree gets filled of values, less
samples have to be taken and more old sample values can be used.
  This is why even a deep recursion level will not explode the render time.

-- 
main(i,_){for(_?--i,main(i+2,"FhhQHFIJD|FQTITFN]zRFHhhTBFHhhTBFysdB"[i]
):_;i&&_>1;printf("%s",_-70?_&1?"[]":" ":(_=0,"\n")),_/=2);} /*- Warp -*/

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