*Cracks knuckles* Here goes.
It's all down to the booker/promoter (often one and the same person). He'll have an idea of what sort of matches he wants (technical, comedy, high-flying etc etc) from who he can get on the show.
Each match needs to tell a story therefore both wrestlers have to be able to get their character over to the crowd in a way that makes the people care enough about them to be interested in the match. The promoter will tell both guys who he wants to win and roughly how long to go on for - often this is where the ref helps them. Sometimes he'll tell them how he wants the match to end, for example if he wants the bad guy to get a reputation then he'll ask him to cheat-to-win, usually behind the ref's back. But more often than not if he knows the guys are good workers he will tell them who is going to win and leaves them sort it out between them.
It's then up to the guys to put on a match which entertains the crowd, tells a good story and makes the people feel they're getting their money's worth.
None of us will pretend the show is real however the injuries are. We can learn to fall ('bump') correctly but it still hurts and we rely on the other guy to protect us whether we're giving or taking the move. There are ways the ref will check if an injury is legit or not but for the sake of kayfabe I won't go in to it here.
Before the match the guys will go over what they want to do and rehearse scenarios. A lot of the time if they are experienced they'll just call it on the fly - some moves just flow together. A lot of the time they'll discuss it in the ring as they go along. Good performers know the tricks of doing this without you noticing it. Bad performers end up getting the crowd discussing it with them...
edit: not all wrestlers or promoters stick to this but these are generally considered what should be the standard points to a match...
http://www.wikihow.com/Create-a-Real-Wrestling-Match
Ignore the 'double down'. Ideally that should only happen once throughout the whole show and usually in the main event otherwise it takes some of the excitement off it.