Lately I've been very interested in this subject, for example I found a very interesting page that actually does it and it does it remarkable well http://www.pictriev.com/
How do they achieve such a grade of accuracy?
Things like recognition algorithms are part of the field of artificial intelligence, specifically the branch of machine learning. An algorithm like this could be be implemented in many ways, for instance with neural networks which try and simulate brains. This question has a list of Python packages to do with machine learning.