In simple words Alexa.com as well as Similarweb.com allow other people to easily understand the estimated traffic you website has.
That may be helpful when a potential advertiser, client or partner wants to check out your site for a possible cooperation.
The better rank you have the more trustful your site appears. If for example you are a blogger and you want people to believe that your blog is a popular one and has many readers then the blog should have quite a good Alexa rank. The same goes if you are an e-commerce,
business or any other kind of internet service.
By default all the Alexa’s ranks are estimated, it means that Alexa doesn’t actually knows exactly how much traffic you have since this information is private and only you have access to it so it uses many different publicly accessible metrics to guess a probable traffic volume your site may have.
Since Alexa keeps its algorithms in secret we can only assume that such metrics would be backlinks, banners, paid advertisement, your search engines positions in different keywords etc. It is quite a big massive of information and cannot be processed fast so Alexa rank may take months to update.
Some insights on the algorithm are revealed in the Alexa.com blog: How are Alexa’s traffic rankings determined?
Also many users have Alexa bar extension installed in their browsers and this extension sends some traffic information but obviously it is not enough to measure all the website in the internet. Our humble advice is to install Alexa’s bar extension to help a litte to your website to rank higher.
It is important to understand that Alexa cannot know when you purchase traffic because it is a private information so you need somehow inform Alexa about it. The only way to do it is to get your website certified in Alexa.com, we recommend to read their official article about it Top 5 Benefits of Alexa Certified Metrics
Once your website is certified and you installed their traffic counter on all the pages all the traffic starts being counted and almost always your rank starts growing pretty fast.