They get sorted alphabetically by title or author depending on selection or by "recent", meaning that the last book that you opened is at the top.
If sorting by author does not look correct, it might be that the author is listed wrong in meta data. Normally the Kindle wants authors listed as "Lastname, Firstname" and display them as "Firstname Lastname". In this case the authors get sorted correctly by last name first, and then by first name. If the metadata has author as "Firstname Lastname," then the Kindle would sort out of the normal order.
The forth option is to sort by "collection" and would show collections first before books without collection. Inside an collection there is recent, author, title as options.
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