It’s not so much that the domain name itself is tagged with authority, but if the domain contains enough pages that are deemed authoritative, then it can be assumed that other pages on the domain are also highly likely to be authoritative, even if the authority of those pages hasn’t been individually calculated yet.
It’s like trusting someone who has given you good advice in the past is likely to give you good advice in the present. That assumption may not be true, but it is a reasonable assumption to make, especially if you are unable to check credibility by other means, at the time.
It makes sense for Google to turn up this dial. It’s very hard to fake factors such as the longevity and influence of a web site, both factors which Google would surely see as markers of quality. Not saying that older domains are of higher quality by virtue of being older, but if you combine age with influence, then you’d have a useful metric. A new domain could also do well, so long as demonstrates a high degree of influence.
All conjecture, of course 😉