Seriously, use google analytics. Trust me, a lot easier to understand.
Google Analytics' numbers are also sometimes questionable. They use cookies to arrive at their numbers, where server-based stats programs such as SmarterStats (the one I use) use the log files, which are more accurate.
Google Analytics shows half the number of visitors that SmarterStats does.
There's also been some concern amongst webmasters (serious ones, not tinfoil hat types) that Google is using the data from Analytics for "traffic shaping" on sites. The idea is that Google decides that a certain site should have X number of visitors based upon criteria derived from Google Analytics, and moves the site's rankings up or down to achieve that level of traffic. At first it sounded paranoid, but there's been enough anecdotal evidence that now some well respected search engine analysts are considering the traffic throttling idea and the link to Google Analytics as a real possibility.
I haven't pulled the plug on Google Analytics, but I just might soon.