It isn't actually called a genius grant, that is just what people have come to refer to it as. It is pretty awesome, though. Imagine picking up the phone one day, and the person on the other line says hello, you are being awarded $500,000, no strings attached, for being original, insightful, and having potential for greatness.
Here are how they are picked: MaccArthur Grant
Thank you. That description helps the understanding significantly.
I noticed this, also on their site: