Many advertisers will audit the effectiveness of a campaign based on the number or percentage of direct responses. Many advertising theorists note a marked decrease in direct response to online advertisements after three impressions per user, but no one's done a thorough audit of how frequency impacts brand awareness. Of course, this is extremely measurable online, so we can look forward to such data in the future. An advertiser trying to gain quick awareness will often specify that frequency be upped to enormous levels. That's high frequency.
Hits are the individual requests a server answers in order to render a single Web page completely.
The page document itself, the various images on the page, any other media files embedded there - each of these items represents a separate hit. In other words, the more GIFs used in a page, the higher the hit count - so while hits may be a good indication of poor page design, they won't tell you much about traffic. They establish standards, conduct industry research, and talk up the Web as a marketing nirvana. The IAB has done good work in the areas of metrics and Web branding, but their vested interest in presenting a rosy image of Web advertising can also make them a tad biased. For example, there are three ads on this page, so you've just accounted for three impressions.