Web analytics is used by all websites to measure web traffic and as a tool for market research. The information that is retrieved through web analytics will be used to drive traffic through advertising to the proper market and in the ways in which people searched for the site.
Every aspect of the web analytics can be used to determine some aspect of the functionality or usability of the business site including its potential conversion rate and customer lifetime value.
Most web analytics tools base their data gathering on inserting a tracking code that picks up the traffic from the website and reports to the server based application that records the data and presents it in a visual or table form. Most tools allow for application of various data filtering, segmentation and comparison, greatly easing the task of data analysis.
Sample web analytics tool is for example Google Analytics but there are many available.