What are they?

Website Analytics provide information about the traffic to your website.  They allow you to see what browsers your traffic is coming from and what type of connection is being used to access your website (T1, Cable Modem, etc).  They also show you which page of your website attract the most visitors.  How long the average visit to your website lasts.  They also allow you to view the source of your website traffic- Did your visitor come by directly typing your url or via search or perhaps from a link to your website from another website.

Why are they important?

Analytics are a vital part of your website.  They allow you to track the effectiveness of your marketing campaigns whether web based or mail based.  You can track goals in your analytics.  For example, a goal might be a visitor making a purchase from your website.  You can create custom definitions in your analytics to show a path to obtaining the goal and how many visitors start the process and actually complete it. 

Analytics can also provide you with information on how effective a Google Adwords campaign has been.  Helping you to refine your target market.

The important thing to remember is to utilize the information analytics provide you.  It is not enough to view the information, you have to analyze it and refine your process so that  you get the most out of your website presence.

Free Analytic Services

There are free analytic services out there for you to investigate to decide which best suits your needs or your hosting provider may include analytics in your hosting contract.  Here is a link regarding Google Analytics and important elements Google offers in their analytics.  Here is another link to the best free website analytic tools.