t_s basically serves as "gravity" to make older posts fall down the page. Why Dec 8, 2005? Maybe that's when they launched. Anyway, what t_s does in the function is equate a 10-fold increase in points with being submitted 12.5 hours (that's 45,000 secs) later. So a 1-hour-old post would have to improve its vote differential 10x over the next 12.5 hours to maintain it's rating to compensate for elapsed time. If a post's vote differential increases more than 10x in 12.5 hours, its rating goes up.
As for where the numbers come from, I'm pretty sure they're tuned by trial-and-error. It's really hard to predict voting patterns beforehand (ie how fast should items "fall" from the main page?)
The log function is there because your first 10 upvotes should have more weight than the 101st to 110th upvotes. The way the formula is written (and assuming 0 downvotes), your first 10 upvotes have the same weight as the next 100 upvotes, which have the same weight as the next 1000, etc. Again, the base of the logarithm is somewhat arbitrary, and can be tuned by trial and error.
And needless to say, if you have more downvotes than upvotes, your rating is negative. That's about it.
(note: I'm just reading the page and interpreting the algorithm - I don't have any special insight into how they chose these particular constants)
Edit: Time since Dec 8, 2005 is an elegant way of doing it. My first (crude) thought would've been to use "time since posting" to determine gravity, but that requires keeping track of what time it is now. This method is completely independent of the current time. So nicely done.