Affiliate tracking is the process of managing and tracking marketing activities, usually through the use of a special software and different plugins installed in affiliate websites.
The sales, conversions and clicks from affiliate websites are being tracked in order to measure the performance of affiliates. This is to allow the owner of affiliate networks to track the performance of their affiliates in order to measure which ones are driving traffic and revenue and to be able to give proper compensation.
Techopedia explains Affiliate Tracking
Affiliate tracking is being used by businesses that own affiliate networks in order to manage its affiliates and gain insight to the performance of each affiliate and the network as a whole.
This allows the network owner as well as each affiliate to track and gain insight to which portions of the network receive the most visitors, conversions, traffic or clicks, and be able to see if a marketing campaign is working or not.
There are many types of affiliate tracking software being used depending on the business model, most of which show graphs of different metrics. Popular affiliate networks are Amazon and Ebay, who give out commissions for every purchase made from or through its affiliates.