From what I've read the stars represent who is recruiting a player. Meaning if LSU, Bama, Ohio State, USC, and Notre Dame are all interested, the kid will be 5 stars.
Therefore if a kid is in a bad place grade wise and the big schools don't think he'll qualify (Griffin last year, Alex Johnson this year) he will not receive stars regardless of his ability because the big schools will pass on him.
Also, if a kid commits to a small school early on and makes it clear he is not interested in receiving other offers his stars will remain lower than if he waited till the last minute to make his decision and allowed other schools to give him offers.
This is my basic understanding of how the system works, but I'm sure there are a lot more complexities.
Bottom line is, getting kids with many stars does not necessarily mean he is more talented than other recruits, but it does mean the kid chose us over tougher competition. So while it may not be a good indicator of incoming talent, like someone said before it is a good indication of how good our staff is doing at winning the recruiting battles.