The simplest way to think of the Alexa Ranking is the website's worldwide popularity ranking. Google and Facebook are 1 and 2. (Makes sense right?)
If you're interested in learning more, here is the definition straight from Alexa's website:
Alexa’s traffic estimates and ranks are based on the browsing behavior of people in our global data panel which is a sample of all internet users.
Alexa’s Traffic Ranks are based on the traffic data provided by users in Alexa’s global data panel over a rolling three month period. Traffic Ranks are updated daily. A site’s ranking is based on a combined measure of Unique Visitors and Pageviews. Unique Visitors are determined by the number of unique Alexa users who visit a site on a given day. Pageviews are the total number of Alexa user URL requests for a site. However, multiple requests for the same URL on the same day by the same user are counted as a single Pageview. The site with the highest combination of unique visitors and pageviews is ranked #1. Additionally, we employ data normalization to correct for biases that may occur in our data.
If your site’s metrics are Certified, you can display Global and Country ranks for your site based on Certified Site Metrics, instead of metrics estimated from our data panel.
Alexa’s Traffic Ranks are for top-level domains only (e.g., domain.com). We do not provide separate rankings for subpages within a domain (e.g., http://www.domain.com/subpage.html ) or subdomains (e.g., subdomain.domain.com) unless we can automatically identify them as personal home pages or blogs, like those hosted on sites like Blogger (blogspot.com). If a site is identified as a personal home page or blog, it will have its own Traffic Rank, separate from its host domain.
Content Courtesy of Alexa.com's Support page: