How the dominant color is chosen
On the server the image is grouped into a small number of colors, 6 by default and anywhere from 4 to 12. Each pixel joins the group it is closest to, and the group with the most pixels is the dominant color. Transparent pixels are skipped, so a cut-out product or logo is measured on the visible part only.
Changing the number of colors can shift the result a little. With fewer groups, similar shades merge, and a family of greens spread across a photo may combine to overtake a single large grey area.
Dominant, average and eye-catching are different
The average color of a photo is a blend of everything in it, which usually comes out as a muddy grey or brown that may not appear anywhere in the image. The dominant color is a real color that covers the largest share of the picture.
It is also not necessarily the color you notice first. In a photo of a red car on a grey street, the street is dominant even though the car draws the eye. If you want the subject's color, crop to the subject first or pick it directly by clicking on it.
Uses for an image's dominant color
Common uses include a background color that shows while a large image loads, a card or page background behind album art or a product photo, and an overlay or border that feels connected to the image. Designers also use it to sort or group a collection of photos by color. Copy the HEX value and use it as a CSS background-color, or copy the full palette as CSS variables.