It's a mix of recruitment and interviews. Potential students will be meeting with professors and students for two days. The first day has individual meetings with faculty with similar research interests. They're really looking for good matches between students and faculty. If there isn't a match for a student, then there's a lower chance that student will get an offer. If a professor says "I want to work with you" and you say "I want to work with you", then the chances of getting an offer are much higher. Over the days the students are here, there are socials with the current students (and sometimes faculty) as well (hockey game, nice dinner, house party, bar night). The current students are more on the recruitment side of things. We try to give an accurate depiction of the departmental vibe/student life/etc. There isn't any "trick a student into coming here". If a student says "I want to work with X at university Y, I have an offer, and X wants to work with me" (with Y != Michigan), then we encourage them to do that.
Some advice for people going to visit weekends:
Meet the potential students for people you may want to keep in contact with. They're going to be your peers when in school and your competition when applying for jobs. Also, having outside-your-department friends is great at conference as academic networking is sadly an important aspect of the culture (and cross-school conference pub nights are pretty fun).
Even if you don't drink, go to the evening social events with students.
Be honest about your research interests, thoughts for your future, and what you want out of a program. Saying what you think they want to hear (vs. the truth) will only hurt you in the long run. We had a student who misrepresented himself during the weekend. He ended up not having similar research interests or as vigorous a mathematical background as he had proclaimed. He didn't make it through the qualifying exam process. I don't mean to scare any of you, just be honest.
If Michigan (or whatever school you're visiting) is your first choice, let the person you want to work with know.
Read faculty web pages before the visit. Have a good idea which ones you might want to work with so you can spend time talking with them. On the Michigan visit, I can't remember if you know which faculty you're meeting on the first day before you arrive or after you get to the hotel the first evening. Either way, read those faculty web pages in detail, look at where they're placing students, and have questions. They'll try to talk to you about their research, but the interaction goes smoother if you can ask some engaging questions.
Anyway, I need to go participate in an ergo experiment (beer money).