There's actually a curved graph that relates in a graph form your exact question! Typically trends are predicted anywhere between 6-12 months in advance to that particular season; sometimes even 18. It starts with the innovators; these are typically people who are extremely fashion forward, up to date with all of the trends, have a unique sense of style as well, and often times are apart of a "blogmosphere". Then we have your early adopters, these people begin to notice the innovators style across the board and decide to adopt it slightly, or modify it to their way. Then the early majority, this is typically what we see, for most recent example, "hipsters". Before it was a wide-spread popular, "underground" thing that eventually rose up. What we are seeing now with this vintage trend is the late majority and laggards. These are the people who are either afraid of fashion risks, no real sense of self and style, or have been living under a hole. If you've noticed almost everyone now is into the whole "hipster" vintage look in some way shape or form. This is also why we are seeing a rise in popularity of the rose gold due to its vintage nature.
You must also note that fashion trends run in cycles, about every ten years what was once old is new again! Of course, like I stated in a previous question, pop culture, socio, poltical, and economic issues also will dictate trends. This is why we saw lots of grays in 2008. Fashion is about expressing yourself, so this will also explain why you will see a trend tweaked in many different ways, by many different people. Trends are only a matter of guiding you, not setting in stone what you must buy/wear.
As for how designers all know: there are two very large trend forecasting companies in Los Angeles and New York. These companies send people out across the globe to, basically, people watch. They travel every where to see what's popular and bring back the information to utilize for the upcoming seasons. There are also highly exclusive trade shows that happen in Milan and Paris every year. These trade shows include: fabric, color, as well as silhouette, cut and style. Designers come here to determine which fabrics, colors, and cuts/styles will be popular this coming seasons.
Hope that answers your question in a bit more detail!