okcupid does exactly this. Most of their questions are submitted by the users themselves, and they have hundreds if not thousands of them, but they present the questions to you in the order of most differentiating first. You can answer as many or as few as you want, but matches get better as you answer more, with monotonically diminishing returns. You also get to say which answers you would accept from your match (doesn't have to include your answer) and how much it matters if at all.

My gut tells me it's akin to doing principle component analysis. To find the most differentiating question, do 1 dimensional PCA, and the question most aligned with the resulting dimension is question #1. Then do 2 dimensional PCA fixing the first dimension as the first question. The result is question #2. And so on.

OF FAR GREATER CONCERN: They are collecting email addresses associated with personality questions. There is no privacy policy, other than the statement "If there's a match, we'll email you. (You will not be emailed under any other circumstances: no promos, no newsletters, nothing except news of a match.)" You don't know to whom you are giving this information, as there is no named legal entity, just a gmail address and a domain name whose registered owner is hidden in whois databases.