I've been 4 times. Three of the times, the selection was semi-random, based on how well each audience member was able to play a game similar to "Easy As 1-2-3" using a keypad. The last time (in Las Vegas), the selection was entirely random.
I would assume because there is a sizeable fee to see the show that they have to give everyone an equal chance of getting selected.
And yes, despite the randomness and the large size of the crowd, I've seen two people from the same group get selected to compete in the showcase.