As per Alexa ( The Web Information Company ) "Alexa computes traffic rankings by analyzing the Web usage of millions of Alexa Toolbar users. The information is sorted, sifted, anonymized, counted, and computed, until, finally, we get the traffic rankings shown in the Alexa service."
"The traffic rank is based on three months of aggregated historical traffic data from millions of Alexa Toolbar users and is a combined measure of page views and users (reach).
As a first step, Alexa computes the reach and number of page views for all sites on the Web on a daily basis.
The main Alexa traffic rank is based on the geometric mean of these two quantities averaged over time (so that the rank of a site reflects both the number of users who visit that site as well as the number of pages on the site viewed by those users).
The three-month change is determined by comparing the site's current rank with its rank from three months ago.
For example, on July 1, the three-month change would show the difference between the rank based on traffic during the first quarter of the year and the rank based on traffic during the second quarter."
"The traffic rank is based on three months of aggregated historical traffic data from millions of Alexa Toolbar users and is a combined measure of page views and users (reach).
As a first step, Alexa computes the reach and number of page views for all sites on the Web on a daily basis.
The main Alexa traffic rank is based on the geometric mean of these two quantities averaged over time (so that the rank of a site reflects both the number of users who visit that site as well as the number of pages on the site viewed by those users).
The three-month change is determined by comparing the site's current rank with its rank from three months ago.
For example, on July 1, the three-month change would show the difference between the rank based on traffic during the first quarter of the year and the rank based on traffic during the second quarter."
Source: Alexa The Web Information Company
http://www.alexa.com/site/help/traffic_learn_more