x0n's answer was right until October 18, 2011, but now the Market says :
As of October 18, 2011, developers may notice a decrease in active set counters displayed in the Android Market Developer Console. Some application updates were considered active installations. Now we are using a different calculation methodology, which does not include installing an application update. Switching to the active metric setting will correctly reflect the device settings. Please note that the total installation account has not been affected.
Oddly enough, the statistics footnote still says:
Total Active Installs represents the number of devices on which the application is installed. This includes updates.
I reported this inconsistency to Google.
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