There are many indicators that help you determine how well you are doing with your website. There is link popularity, search engine saturation, keyword positioning, page rank, etc. Each of these alone are not the only things you need to work on. Each of these is an indicator of how well your are doing and together they can give you an idea of where your strengths and weaknesses are.
Alexa ranking is another indicator you can use in conjunction with the other things. It is by no means an absolute measure of your websiote’s popularity. Only those who use the alexa toolbar are gathering statistics for alexa. They take that sampling of their users, then expand it to a percentage to reflect all Internet users. Much like a poll where they ask 1000 people questions and give you the percentage of who said what, then saying 4 out of 5 people say . . . etc.
Use Alexa ranking as just one of the many tools you use to determine if you are on the right track with your website, but do not think that when Alexa ranks you number 100,785 that your website is really in that position. It is only statistics.