Personal projects are the perfect opportunity to show you at your most creative. They should be a combination of your personal passion and your beloved career.
Graphic designers are a rare breed. Almost all of them seem to love their job. Maybe not the company they work for necessarily, but the love of being a graphic designer. And that is why so many have personal projects.
Bear in mind that just because you are a graphic designer does not mean your personal project HAS to be a graphic design project. If you like baking, that's cool too. Don't be afraid to talk about whatever you like, no matter your passion (although discussing bondage might raise a few eyebrows), if you love something, then it is likely you will talk passionately about it. That in itself is interesting.
Talking about your personal projects will set you apart from the other candidates, it will help us to understand your personality.
Any personal hobby or passion can be brought together with graphic design. All you need to do is think of it as a commercial entity. If topiary floats your boat, then imagine yourself as a topiary consultant, the person to call to turn that unruly hedge into a flamingo. You get the idea.
So, let's say you do like baking, you can link your love of homemade muffins to your chosen career by designing the gift boxes, giving the enterprise and identity, building a website. Whatever.
I suggest you place this work in the centre of your portfolio. Check out What to put in your portfolio and get a job: Graphic Design for more tips on the order you might show your work.
Remember, anything that sets you apart from the crowd, anything that you care about and anything that you speak about will be interesting to the person that is interviewing you.