N5 and N4 were a mix of standard frequency lists, as well as the vocabulary included in genki. From N3 onwards, it is basically just a mix of frequency, vocab words that appear in various textbooks, and pure judgement calls from the content team on what words actually do appear very often in real life.
Note that the last one is not a huge influencer, it’s more just for cases where a very common word like 申請 (to make an application) might appear in N2, but we would potentially put in in N3 rather than a word like トランペット (Trumpet), which many people are quite likely to recognize on their first time seeing it anyway.