Stats supplied by your host are derived from your web server log files. These stats will overestimate your traffic for the following three reasons :
If someone loads an image (or any non-HTML file) from your site without loading an actual web page the server logs will count a visit regardless. Since the visitor did not actually make it to your site Web-Stat filters these events out and no visit is counted.
If a robot, spider, or any automated process loads your page, your server logs will show a visit. Web-Stat correctly filters out all artificial traffic and only shows 'real' visitors.
Server log reports separate visitors by looking at their IPs ; more and more with cable modems, people use firewalls that change their IP at each HTTP request, so everytime one of these visitors requests a document from your site, the server logs will see a different IP and count a new visit. Web-Stat will correctly identify these requests as part as a single visit. This alone causes large discrepancies as the server logs show a lot more visitors than actually came to your site.
Web-Stat's data is not derived from your server logs and this makes it much more precise than stats that may be supplied by your host.