Google made an update to the algorithm behind the traffic estimates you see in AdWords. "As a result of these updates, we hope to provide you with better statistics for estimated clicks, cost, and ad position. This change is effective now and affects all AdWords accounts globally," stated Google.
One of the most common uses of traffic estimates is to evaluate potential keywords and decide whether you should add them to your account. Traffic estimates are also useful in determining if your bids and budgets are appropriate for these new keywords.
In order to determine if you're setting an appropriate target bid, try entering a few different values in the Max CPC field the next time you use the Traffic Estimator. Look at how these different bids affect your statistics, and then decide which bid gives you the best return on investment. You can use the same process for trying out new budgets.
[Source: Inside AdWords]