What are premium domains? How does something become "premium"?

I can assume something like games, auction, shopping or sex could become premium domain due to 1. they being a dictionary word or 2. high demand. However, there could be other 2 word domain names that could be premium, or LLL or LLLL, or NNN etc which are premium.

On the contrary, something like colors, names of fruits (apart from apple!) or other dictionary words like verbs/ adjectives might not be premium at all.

So what gets classified as premium and what does not?

Cheers.