How does the release date prediction work?

The release date prediction first calculates how much work remains in the release. This is the sum of the rough estimates of the backlog items that are not yet done in the release. Then it calculates how many days are needed to complete that remaining amount of work, using the velocity per week that you've entered. And then it adds that number of days to today's date (or the start date if we aren't past that yet), to get the predicted release date.