Google keeps many records, including your web searches. These records enable you to have personalized search results. The search history is also linked to your other Google services, like Gmail and Calendar.
If you didn’t know this (you’re not alone) and would like to stop Google from recording your searches, you can turn off search history recording in the settings page.
Google Search History
Ex-Google employee Nelson Minar has more information on this issue.
It’s still unclear to me exactly when Google started recording these histories under account names. Six tech savvy friends I asked all found they had some sort of history on Google going back as far as eighteen months. Only half of them remember having turned on some personalization feature that would have resulted in that history being collected. A seventh friend who is scrupulous about cookies and logins had no history. He regrets that his privacy concerns keep him from using Google Reader.
So if you have privacy concerns make sure to check that search history page! (I checked but found no history was recorded for my gmail account…)