I described the mechanism, though maybe not all too clearly. In a nutshell, the design mechanism is negative feedback (natural selection), with the tolerance spec being effective reproduction. The process is fed with the vast quantity of chaos and energy ultimately supplied by the sun for the most part.
Note that this is a very good design process for extremely complex systems, and as human engineering gets more complicated, we rely on this type of design process more and more. You let a system randomly interact with itself and apply a filter to the results that looks for stable forms. Most of the stuff a chaotic system generates is utter crap or mediocre at best, but it occasionally generates truly useful and interesting designs purely by chance. High performance mechanical systems are frequently designed this way; I know for a fact that recent generation hard drives are. You may wonder how modern hard drive designs emerged by filtering chaos, because it seems improbable, but it does work and it turns out to be a more efficient design process in many cases than "traditional" engineering.