They work like this:
The number of stars awarded is based on the number of days for which you were or have been (and still are) a status customer with Miles & More. Frequent Travellers will receive one point for each day they have held their status, Senators receive two points per day and HON Circle Members receive three points per day.
Once 5,000 points are reached, you will be awarded one star, from 10,000 points two stars, from 15,000 points three stars and so on. You can receive up to a maximum of 5 stars in total. Incidentally, these stars will also be displayed in your personal online status lounge.