Until now, Google personalized the results based on the search history only for users that were logged in and enabled the Web History service. Google created a profile from your search history and used it to disambiguate your queries and slightly alter the rankings for pages that were likely to match your interests.
The new signal for personalizing results (recent searches) should work without having to log in and could influence the results in a different way. In many cases, people constantly refine their queries by adding or removing keywords, but Google and other search engines don't use all these refinements to improve the results in real time. By connecting the related searches from a session, Google will understand more from what you intend to find and should deliver better results.
While search history disambiguates general queries, the list of recent searches connects the failed attempts to find an answer for a complex query and creates a more detailed description of your intentions. Search history could be Google's long-term memory and the recent queries could build the working memory.
Google search patterns (from "Searching for the mind of the searcher" [PDF], by Daniel Russell)