…It is actually a hidden application that monitors how many people enter a site through their browser add-ons…
Its not really a hidden application. Its a browser toolbar. Like all your other browser toolbars, you have the option to make it hidden.
Alexa rating isn’t really accurate for measuring your traffic vs the rest of the internet because yes we all know that webmasters and internet marketers are the majority of toolbar users and those type of websites will get higher rankings easier because their traffic is from webmasters. But alexa ranking can give you a good idea of your traffic compared to other websites in your niche. As casino webmasters we all get pretty much the same type of traffic and we should have approximately the same percentage of visitors with the toolbar installed. Most average internet users don’t even know what alexa is and don’t know that the toolbar is even installed on their computer because alexa has many contracts with software companies that package their toolbar with other software. If the user has spyware software installed then they usually remove it because although harmless, it is a class of spyware and the average user don’t know what it does.
…But many webmasters use software like Alexa Booster and it will give false results…
That doesn’t work anymore. There is no software out there that will increase your alexa rankings. If you find something that claims it does then go ahead and waste your money but you will be in for a big disappointment.
Some believe the Google algorithm also uses Alexa rankings – might be a rumor.
I have also heard this before but I have no idea on its accuracy or even how much of an effect it would have on your rankings.