They don't Actually I suppose good content often get a lot of natural links. That could be a way to determine it. Also content published on established sites is good most of the times, so... here you go.
It doesn't. This is why people constantly parrotting "content is king" without thinking about what it actually means is just stupid. It's a bot - it has no way of evaluating whether your graphics are good, or whether your text makes sense. What it can evaluate is if your code is clean, if your content is duplicated, or if your keywords are at a 'spammy' density
"content is the king" means something else: good content will attract returning visitors, first time visitors from SE and natural links. Good content has nothing to do with Google evaluating its quality.
The high quality advertisement uses relevant ad text and keywords and links to the most relevant hall page possible.
I agree that the only quality issues Google can check are uniqueness, amount of text and keyword density. They can't tell if it is written by an English professor or a 12 year old.
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