Here's how to set it up for your own website.
You need a Google account to start (you just need to provide them with an email address and a password). Then go to Google Analytics (https://www.google.com/analytics/). Click "Add An Account" (shown below, the link is circled).

Next, copy-and-paste in the URL of your site, give it a name, and provide your time zone (below).

You'll go through a couple more screens, asking for your name, and agreeing to their terms of service. Google will then give you a snippet of code (shown below) in a box. Click inside the box, and hit Ctrl+C to copy the code.

Open the code of your index page using Dreamweaver or Notepad. Go to the very bottom of the code and paste (Ctrl+V) the Google code just above the closing body tag. Save the page. Do this to EVERY Page page on your website.

And that's it! In 24 hours you'll have a snapshot of web activity on your site. It'll update every 24 hours. Go to the same analytics page (https://www.google.com/analytics/) to see it. The graph and numbers below it will give you a basic overview. The lefthand navigation allows you to look at specific metrics: traffic sources, browser capabilities, etc. A screenshot is provided below; click to enlarge it.
