Daisy, I believe Facebook uses any information they gather about where you grew up, went to school, and worked to figure out people you may know. I agree that it can be unsettling. One or two of my mortal enemies showed up on my "suggested friends" list. Luckily, you can have them removed from that list, so you don't see them anymore.
If you do "friend" someone you don't really want to be friend with, you can pretty much ignore them on Facebook without them even knowing it, by selecting one of their postings that shows up in your feed and requesting to ignore future postings from them.
I noticed that if I read a story on a local newspaper's website, suddendly it shows up as one of my recommendations in an advertistement that list Facebook links. I don't like that. Just because I read a story does not mean I endorse it or want to recommend it.
The whole thing is kind of spooky.