The people I've met that have graduated from there are among the most intelligent people I've ever met in Japan.
I haven't met many Tokyo University graduates (the other rival for top spot in Japan's academic world), so its difficult to make a judgement from my experience.
But the fact that the overwhelming number of Japan's Nobel Laureates are associated with the uni, it does make me wonder whether they have something there that makes the learning environment special.. 8 out of 16 winners in the field of Natural Sciences are connected to Kyoto University