Before I answer this question, please let me explain what Alexa ranking is.
As far as I know, Alexa ranking tool is the currently the most popular tool on the web that you can use to compare the traffic of different websites. Alexa just keeps the track of the hits that each website receives from different resources.
How Alexa can do it?
Alexa do it through the Alexa toolbar that some of the internet users install on their internet browsers. When internet users install the Alexa toolbar on their internet browsers, Alexa will keep the track of all the websites that they visit and so Alexa knows that how many times a website is visited by an internet user who has the Alexa toolbar installed on his/her browser.
What Does It Mean?
It means Alexa can only track the traffic of the websites through the browser that the Alexa toolbar is already installed on them. As the Alexa toolbar is not installed on all the internet browsers on all of the internet users computers, therefore Alexa is not able to track all the traffic of websites.
Some websites are more visited by the users that majority of them equip their internet browsers with Alexa toolbar. For example many of blogging or SEO related sites are mainly visited by users whose internet browser is equipped with Alexa toolbar, because they know and need Alexa and its products and services more than the other internet users.
Those who install the Alexa toolbar on their browsers are among webmasters, bloggers and internet marketers who know Alexa and the information it gives is important for them. For example they want to know the traffic ranking of their competitors websites and compare them to their own sites. They also like to keep the track of their own websites/weblogs traffic improvement and know if it is increasing or decreasing.
The websites that are usually visited by these internet users are different. For example they don’t visit health or beauty related sites unless they have such websites or weblogs to promote health or beauty products. They visit the marketing, programming, web designing related websites more and participate in related forums. They read the internet marketing and blogging related blogs more than the blogs that are related – for example – to cars. So they increase the Alexa rank of some special websites and not all websites. Whereas the other internet users do not even know about Alexa and they don’t care about it, and so they do not bother to install the Alexa toolbar or ranking tool on their internet browsers.
It means if you see that a health related website’s Alexa traffic rank is 200,000 and a SEO related website’s Alexa traffic rank is 20,000, it doesn’t mean that the second website traffic is 10 times more than the first website. The second website is mainly visited by those who have the Alexa tool bar or Alexa rank toolbar on their browsers, but the first website is visited by the users that most of them do not even know what Alexa is and what traffic rank means.
This is what you have to know if you want to buy a website or advertise on a site. Do not be fooled by a high Alexa rank. Although Alexa traffic rank is important but you have to check so many other things too.
Also consider this that most webmasters and bloggers have the Alexa toolbar on their browsers to increase their own websites/weblogs Alexa ranking. Because they browse their own websites pages several times a day and this will also increase the Alexa ranking.
Generally Alexa ranking is a helpful and good tool to compare the traffic of websites but it is not accurate. We don’t know that how many users have the Alexa toolbar installed on their browsers because Alexa doesn’t disclose it. They just say “millions” but it can not be true because Alexa is not a popular website among internet users. They even don’t let you know their own website Alexa ranking.
If one day a popular website like Google (which is the most popular website indeed), runs something like Alexa toolbar. If so, the statistics of this tool will be much much closer to reality, because the number of users that use Google and its services and tools are much more than the number of users that use a website like Alexa.