Instagram isn't reading your mind—yet. It's just really good at watching everything you do, everywhere you go, and probably knows you better than your own brain at this point.
It doesn't.
It shows you random shit, you look at the random shit that catches your eye, it tries to show you less random shit. Repeat.
It’s only reading your mind if the only thing in there is “how do I give Zuckerberg more money?”.