Ok, I will try to answer this question as best as possible.
Live365 basically offers two different ways of storing playlists, either you specify one track-by-track or your station is put on "random" (just like your CD player).
When Muppet Central Radio first started years ago, we just used random. It worked ok, but there were inherently problems with it in that I wanted a more customizable solution. For example, it might pick multiple Sesame songs to play back-to-back or multiple versions of Rainbow Connection to play within the same hour or other conflicts like that. I've worked in radio for a few years professionally and desired that we had a real "clock" so that particular categories of songs play at different intervals and so forth.
So I plan the playlists myself, then convert them to a format that Live365 will recognize. There are currently 30 different "categories" in our playlist each hour. The songs in each category will repeat at different intervals dependent on how many songs are in that category. This allows us to have more popular tracks repeat more often while others do not. I tweak the structure every couple weeks as changes need to be made.
And that's a little bit about how our playlists are designed.