Alexa’s Traffic Ranks are based on the traffic data provided by Alexa Toolbar users and data collected from other, diverse sources over a rolling 3 month period. Traffic Ranks are updated daily. A site’s ranking is based on a combined measure of Reach and Pageviews. Reach is determined by the number of unique Alexa users who visit a site on a given day. Pageviews are the total number of Alexa user URL requests for a site. However, multiple requests for the same URL on the same day by the same user are counted as a single Pageview. The site with the highest combination of users (Reach) and Pageviews is ranked #1. Additionally, we employ data normalization to correct for biases that may occur in our data.
Alexa’s Traffic Ranks are for top level domains only (e.g., domain.com). We do not provide separate rankings for subpages within a domain (e.g., http://www.domain.com/subpage.html ) or subdomains (e.g., subdomain.domain.com) unless we are able to automatically identify them as personal home pages or blogs, like those hosted on sites like Blogger (blogspot.com). If a site is identified as a personal home page or blog, it will have its own Traffic Rank, separate from its host domain.
Please note that Alexa doesn’t have access to any site’s private usage logs. For more detailed information about Alexa’s traffic rankings, you can visit:
There are limits to statistics based on the data available. Sites with relatively low measured traffic will not be accurately ranked by Alexa. We do not receive enough data from our sources to make rankings beyond 100,000 statistically meaningful. (However, on the flip side of that, the closer a site gets to #1, the more reliable its rank.) This means that, for example, the difference in traffic between a site ranked 1,000,000 and a site ranked 2,000,000 has low statistical significance. Sites ranked 100,000+ may be subject to large ranking swings due to the scarcity of data for those sites. It is not unusual for such sites to decline to “No data” Traffic Ranks, or to improve suddenly.
(info taken from alexa.com)