A contest for admission was announced to be conducted entirely in HNews threads and based on popularity.
Pinboard won overwhelmingly but was disqualified based on a private, ambiguous, and somewhat troubling conversation that took place outside of HNews threads (where Pinboard's founder made the YCombinator partner interviewing him "unconfortable" for unspecified reasons).
When people expressed reservations about this, the story was revised: The YCombinator partner actually believed that Pinboard's application was just a joke, and in any case Pinboard had violated a secret/unwritten rule not to solicit votes outside of HNews, which disqualified them anyhow.
As todays announcement probably made clear, that didn't really solve the problem, because it felt way too much like "We don't like Pinboard's founder, and we'll revise the rules until he loses." Not saying in any way that's what happened, but that's the optics.
Anyhow, I'm glad things are resolved, it seems everyone walked away reasonable happy, and YCombinator seems to have moved quickly and decisively to draw a line under it and move on. However...
...in my personal view the problem arose 100% because of a series of poor decisions by YCombinator. :(
Edit: The conditions of winning were described as "At the end of the month, we'll rank the startups and YC will fund two. The ranking will depend both on upvotes and on the quality of discussion, similar to how the ranking of stories works. We can talk about this in the comments, but to answer one question I know will come up: Upvotes are an important factor but they're too brittle to rely on exclusively; doing so would encourage the wrong kind of trying to game the system. So we're going to gauge community interest both by upvotes and comments, and in case of doubt I'll make the final call—or better, figure out a way to put the final call to the community." The problem is that 1) the contest was expressed as "find us someone to fund", not "find us someone to interview", and 2) Pinboard wasn't disqualified based on either upvotes or comments, but based on other factors not mentioned in the post.