How can you tell when you're watching an award-worthy acting performance?

This question is really for those of you who may be actors, drama coaches, entertainment critics, or other film industry insiders, so please mention relevant experience when responding. Is there a way to tell when an acting performance (especially a lead performance) is worthy of being nominated for a major award? I've watched a lot of movies over the years, and I'm at a loss to explain how a good performance differs from a great one. I have a vague notion that I should believe I'm "seeing" a character on screen instead of the actor portraying that character, and that the portrayal should draw me into the story, but that could be just as easily accomplished through overacting and melodrama. Is there more to it, or is the nomination process influenced less by performance quality and more by popularity and studio politics?