The WIFI chip, because of size constraints was limited to how many streams it can handle since it does other duties too (I think Bluetooth and maybe others). The older phones (Nexus 4 and others) also had 1x1 spatial streams but were limited to 20mhz so that's why their max was 75Mbps (or some 72Mbps which some routers will show). The Nexus 5 has a 40mhz chip so it can link at faster rates. Using iPerf I think doesn' send TCP ACKs so that's why they were able to get 136Mbps which is close to the theoretical 150Mbps (or 144Mbps). In the real world however you wont get anything close to that as the internet works on TCP so it has to ACKnowledge every transmission which slows down reception of new data.
1x1 is relating to the spatial streams that a chip can handle..
In order to send faster speeds the device sends and receives streams at the same time. This is why new routers have 3 physical antennas, each connected to a radio (those are 3x3 ones).
In the N spec, each radio can send at a max of 75Mbps using 20Mhz of bandwidth. When you double that to 40Mhz you get 150Mbps. This is why 3x3 routers can do 450Mbps (vs 300Mbps).
The AC routers use the same layout (of 3x3) but because of their better tech (encoding, compression and such) they can put more information within the same bandwidth (20, 40Mhz) and they can use more of it as well since 802.11AC is in the 5Ghz range. They can then use 80Mhz channels as well.
So for AC per spatial stream is about 86Mbps per 20mhz.
So for AC you get 3x3 x 80mhz = 1.3Gbps (1.286Gbps) or only 600Mbps for 40mhz wide channel.
http://www.merunetworks.com/products/technology/80211ac/There's a chart on that page which breaks it down a bit more as well as more info.
-------------------------
As for which it decides to use that depends on a few things.
- If you have the same SSID/Password on both then it will use the stronger signal
- IF you have different ones then it will use whichever you specify till it can't anymore then it will jump onto the next known connection (that is if you have both saved)
- If you only specify 1 frequency to use then it will use that
