So what i did was entered my email address and it showed me my previous password. I usually change my password every month and it gave me my previous password. You might be lucky and get the current password. The site is current. I actually though i bookmarked the link
Basically, It has nothing to do with google and it's not magic. Your password (at one time or another) was involved in a website (and database) hack that means your password is out there. This password would have been linked with your gmail account and that's almost definitely how they know your old password.
Not because they're l33t but because they can look through old hacks and find your password.
Check this website to see some if your details are out there.