A person knows something is their favorite when they prefer it above all other similar things. According to Etymonline.com, the definition of favorite is a "person or thing regarded with especial liking." Thus, a favorite restaurant is one that, given choice, a person selects over all other restaurants.
The English word "favorite" originated from either the Italian "favorito," the Middle French "favorit" or the Latin "favorem" in the late 16th century. It serves as a noun, adjective or corresponding noun in English grammar. Synonyms for favorite include prize, pet and darling for nouns and prized, favored and beloved for adjectives.