when I first took over a website about 14 months ago, I drank the Alexa kool-aid as the site was inside the top 250k and this was with some declining numbers (it was in the top 100k a couple year earlier), so I bought into the fact that this is a good indicator. However, in the last 14 months, my user activity has increased and the Alexa ranking until recently dove into lower than 450k (now its back in the top 250k).
To illustrate this point, look at my numbers at a 10 day period from Dec. 29 to Jan.7 (first column is the rank, the second is the increase per day)
January 7th 295,691 22,318
January 6th 318,009 18,258
January 5th 336,267 13,918
January 4th 350,185 12,752
January 3rd 362,937 26,351
January 2nd 389,288 9,473
January 1st 398,761 17,525
December 31st 416,286 27,939
December 30th 444,225 14,258
December 29th 458,483 N/A
I did not do much work to the site, except clean up some dormant items; but nothing that should have caused my number to skyrocket like this. So, IMO, it is an "indicator", maybe??, but not much more than that.