Like it says on the tin. I'm not sure exactly how it decides what species the new pop will be, but I've even had it give me a species that wasn't yet in my empire. I settled near the Drath during a war, and then manufactured several Drath citizens, who hated my guts.

My homeworld of Iconia is almost entirely filled with Arceans now. They were closest to me, we fought a lot, and almost from the time of our first war my pop assembly at home has been overwhelmingly Arcean. As I write this, Iconia has 2 Yor and 22 Arceans.

This is especially bad because as Yor I'm not allowed to build food improvements. So I have an ever expanding pool of organics being fed entirely on captured food sources.