"Rack and pinion" describes the main mechanism for moving the tie rods that themselves steer the front wheels.
The steering has a variable ratio, meaning that the rack teeth are placed closer together towards the centre and farther apart towards the outside. This means that movements of the steering wheel are "amplified" as the wheel is turned more towards lock.
The basic way power steering works is that as the wheel is turned this way or that, pressurized hydraulic fluid pushes on one side of a cylinder or the other, giving the rack an extra push. The system used by BMW is from ZF Lenksystem and is called Servotronic. It provides greater steering assistance at lower speeds by using a computer.
The F10 M5 uses a new type of power steering pump called a VARIOSERV power steering pump from ZF for increased efficiency.
This uses an offset rotor, much like for the oil pump in the car, to vary the amount of oil pumped through the system depending upon need.
This means that less drag is placed on the engine when the power steering is not operating as strongly.
The Servotronic is called "M Servotronic" because the electronics are tuned specifically for the M5 and there is a button that adjusts the degree of assistance (Comfort, Sport, and SportPlus).
The complete system is shown below.