Microsoft has detailed the upcoming improved matchmaking system which will make its debut on the Xbox One.
Can find the perfect players for the perfect game: The system uses advanced algorithms to pair players "based on skill, language, and reputation." The new and improved advanced party system allows you to share stats with Xbox Live and each other. It can also find a match while you are doing something else, Snap keeps you from waiting in lobbies while Xbox Live is trying to find a game to join for you, so you can go do something until the system finds someone who meets the criteria you set, and when it does, you will be notified.
For more information about Smart Match, check out the official Xbox Wire Smart Match article.