Undoubtably the best free web analytics software is Google Analytics - When Google first released this service i was lucky enough to be on the beta test and drive it before most others did and even version one was a very powerful tool for any webmaster. Several years have now passed and the very latest iteration of Google Analytics was launched not too long ago, bringing a much improved interface and the ability to compare information in real time with the flash header is a big step forward.
Google Analytics gives users the ability to track conversions, pageviews, unique browsers, keyword referrals and so much more and i highly recommend that if you have never used an analytics based software before, practise with this first because it is an easy to use, powerful piece of software which will help improve your sites performance and your understanding of your visitors!
More to come including a how to guide for Google Analytics
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