AppBrain is somebody's vision of what the Market should be, and it's not a bad one. The basic app information (name, description, etc) is "pirated" from the Market, as Mark says, but a lot of the other data is stuff they've gathered their own, as far as I can tell. Their client has enough users that it can generate reasonable statistics - what you see on their site - as well as making the recommendations that users see. But I believe that it does scan all the apps that a user has on their phone; it doesn't just work with apps installed through AppBrain. And AFAIK, apps aren't really installed through AppBrain anyway, they just link to the Market.
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