Once you have created and promoted your website, it is time to check on your site traffic. The basic statistics are: the number of visitors per day, where are they from, how they found your site and which pages they visited. Be wary of anyone quoting hits. To display a web page with 5 images takes a minimum of 6 hits. The real measurements are visitors and pages displayed. A visitor is a person or process accessing a page of your site.
Google Analytics is a free service from Google for site statistics. To use Google Analytics requires a free Google Account ID. Log into the analytics site and add a site to your Website Profiles list. You provide the address of the website and a name for the site. Google then provides you with a small piece of JavaScript code that you add to each page of your site. In WordPress this can be placed in the theme header file (header.php), but if you change themes you have to make the change again.
Part of the code will be the Google Analytics’ UID. The structure will be UA-123456-1.

In the Website Profiles listing, this UID will be displayed beside the site address. The 123456 will be your account number. The first site will have -1 with each additional site -2 and so on.
Rather than inserting the Google JavaScript code in the header, I prefer to install the Google Analyticator plugin. The installation is standard; upload to the wp-content/plugins folder or install the zip file via the WP 2.7 Plugsin/Add New interface.

Once installed, activate then go to Settings/Google Analytics and put in the UID supplied by Google when you added the site. There are other options that can be set such as not logging in when an administrator is visiting the site. This keeps the stats more accurate by removing your visits from it. Update the settings.

To validate that the plugin is working, visit your website and do a “Right Click-View Source.” You should see some code close to the top with your UID. It will take Google at least a day before any statistics will appear.
Google has excellent documentation on how to use the service. Now you can visit Google Analytics for statistics on your sites. There are other Google Analytic plugins, but this is the one I am most familiar with. It has served me well.
Google Analytics: http://www.google.com/analytics/
Google Analyticator plugin: http://wordpress.org/extend/plugins/google-analyticator/