As I understand it, it's download traffic during a certain period, as recorded by the tracker.
I think you're right about this. But this makes it harder for smaller torrents to get to the homepage.
Take two torrents that both get 100 downloads, one is 500mb, the other is 5GB:
500mb X 100 downloads = 50GB download traffic
5GB X 100 downloads = 500GB download traffic
Same number of downloads, yet one is 10 times as 'popular'.
I often see torrents that are 'snatched' a lot of times but because the file size is less than 200mb they don't make it to the most popular list.