This section shows the number of first-time visitors to your site and the number of returning visitors to your site. Only visitors who can be identified with cookies are counted. First-time visitors are those who didn't have a cookie on their 1st hits, but had one on later hits. Returning visitors are those who already had a cookie on their 1st hit, and whose previous visit happened before the start of this report period. To get the most accurate information, make sure you set up the Cookies tab in the Options window to properly interpret the cookies you give to visitors.
By considering the ratio between new and returning visitors over a period of time, you can determine if your site is adequately attracting repeat visits. If you consistently have a high number of returning visitors, congratulations; you're doing a good job! However, if you are accustomed to seeing a low number of returning visitors, it's time to figure out why.