Actually, there /is/ an official definition of active installs:
http://market.android.com/support/bin/answer.py?hl=en&answer=139628

active installs = installs - uninstalls

As to application updates: Even if they would be considered, they
would result in one removal and one installation of the app, so they'd
even themselves out and would never distort the statistics, just
change the absolute numbers.

But whether those numbers are accurate I cannot tell.
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