The matter of how the BCS bowls select their teams is a bit arcane. The page on the BCS's website about the selection process is pretty long and steeped in legalese, so here's a more simplified explanation of what goes down on bowl selection day.
If you thought the Rose Bowl should have taken Georgia last season, then read on—you'll find out why that pairing was never a possibility, even if the Rose Bowl wanted to make it happen.
The No. 1 and No. 2 teams in the final BCS poll automatically get in the BCS as they make up the national title game pairing.
The champions of the ACC, Big 12, Big East, Big Ten, Pac-10, and SEC (the "Big Six" conferences) automatically get in if they are not already No. 1 or No. 2 in the final BCS poll.
Notre Dame gets in automatically if it finishes in the top eight of the final BCS poll.
The champion of a mid-major conference gets in automatically if one of two things happens: It is in the top 12 of the final BCS poll, or it is in the top 16 of the final BCS poll and ahead of one of the champs of a Big Six conference.
For example, No. 15 BYU would get an auto-bid by finishing ahead of the ACC champ No. 16 Clemson.
A non-champion from a Big Six conference gets in automatically if it finishes No. 3 or No. 4 in the final BCS standings and that conference's champion is not in the national title game.
Hypothetically, Oklahoma could lose the Big 12 title game and finish No. 3, but still ahead of No. 5 Missouri, the conference champ. Oklahoma would then get an auto-bid.
There are two criteria for being an at-large team: Win nine games and finish in the top 14 of the final BCS poll.
There is, however, a restriction that no conference may have more than two BCS participants. If somehow because of that restriction there aren't four eligible at-larges in the top 14, anyone from the 15-18 range becomes an option.
If you think invoking the 15-18 option sounds unlikely, consider that last season the Big East and ACC had only one team each in the top 14, and the Big Ten barely had two, with Illinois at No. 14. The possibility of not having enough eligible at-large teams actually prompted the BCS to add that 15-18 provision during the 2007 season.
Just think about the possibility of the pre-bowl top 14 consisting of the following schools in whatever order: Ohio State, USC, Arizona State, Oregon, Oklahoma, Missouri, Texas, Kansas, West Virginia, Clemson, Florida, Georgia, LSU, and Auburn. That is plausible for this season, and it would cause the BCS to have to invoke that 15-18 rule.
Team Selection Process
The BCS National Championship Game obviously takes the top two teams in the BCS standings.
Five of the Big Six conferences have tie-ins that guarantee an appearance for their champions in a BCS bowl if that champ is not in the national title game: the ACC with the Orange Bowl, the Big 12 with the Fiesta Bowl, the Big Ten and Pac-10 with the Rose Bowl, and the SEC with the Sugar Bowl.
After the top two teams and the tie-ins are sorted out, whichever bowls lose their tie-in teams to the BCSCG get to choose first. The bowl that lost No. 1 gets to make the first selection. In the case of the past two seasons, that was the Rose Bowl since it lost Big Ten champ Ohio State to the national title game each year.
There is a catch though: The bowl that lost No. 1 cannot select a team from the conference of the No. 2 team (if No. 2 is a Big Six conference champ) without permission of that bowl.
In the case of the past two seasons, the Rose Bowl would have needed permission from the Sugar Bowl to select an SEC team since the Sugar lost SEC champs Florida and LSU to the national title game.
That provision is why the USC-Georgia matchup in the Rose Bowl that everyone wanted last year would have never happened, even if the Rose wanted to set it up. The Sugar Bowl always prefers to have an SEC team in its game and therefore would never have signed off on the Rose taking the Bulldogs.
Once the bowls affected by the national title game have their replacements, it goes by a rotation. The bowl played on the latest date gets first pick, and it works its way backwards in start times. Last season the rotation was Orange, Fiesta, and then Sugar.
That means the selection process took place like this last December:
1. BCSCG takes Ohio State and LSU
2. Rose takes Illinois to replace OSU to get traditional Big Ten/Pac-10 matchup (and couldn't take an SEC team without Sugar's consent)
3. Sugar takes Georgia to replace LSU to lock in an SEC team
4. Orange takes 12-1 at-large Kansas to face tie-in team Virginia Tech
5. Fiesta takes Big East champ West Virginia to face tie-in team Oklahoma
6. Sugar takes auto-bid Hawai'i
This season, the rotation goes Fiesta, Sugar, and then Orange. The Rose Bowl is not included in the rotation because both of its spots have tie-ins, so it will never be filling an empty slot without the void having been caused by a team going to the national title game.
Hopefully this has helped you get a handle on how the BCS selection process works.