There are a couple of different formulas, original and revised. (Cisco's implementation seems to use their own, although with some correspondence to the defined RED formulas. Their defaults can also vary greatly depending on the interface and platform on which they're enabled.) The formulas concern the ratio between min and max, drop percentage and weighting constant. Search the Internet for Floyd and RED and you'll get all the science behind it.

As to comments, in my experience, WRED is a real beast to configure correctly to achieve its design purpose with today's usual traffic mix. It works best with speed regulation of long term, TCP bulk flows.

It can also be used as a multi-level traffic priority dropper (i.e. supporting different DSCP drop priorities, e.g. drop AF33, before AF32, before AF31, etc.)