Yes, it is accurate. If you have questions about accuracy you could always contact Google AdWords support for clarification. This can be done from within your AdWords control panel.
No, completely off. Take their numbers as guesstimates only. I've found way too many that were completely different from what they showed.
Install an analytics package - or better still two. Then compare the results with Google Adwords. My own experience is that the difference - not necessarily the error - is generally within a 4% band. If its more than this it may be worth investigating.
The keyword tool's numbers are completely accurate. I've checked many times over the years as this question comes up often. There are reasons why they wouldn't match. If your budget is not high enough and therefore your keyword not triggering ads on 100% of the searches for it or you are not showing on the first page for all searches. If you're using the numbers for organic ranking, there are some fallacies that most people make. First, misinterpreting the numbers and the differences between organics and PPC. The tool is really meant for advertisers. Next is assuming they are always showing in the same position in organics for every body, every where, all the time. Finally, assuming they will get a certain percentage of clicks, based on some "research" done years ago. There's many such threads too going something like "I'm in second position organically, so why don't I get x number of clicks". Their assumption is they expect that number of clicks just because someone published average percentages and those are not accurate because there are many factors involved. The study is somewhat flawed as well and out of date.
I can defiantly say that in some cases the Google conversion tool is not accurate. especially if you are trying to track sales at the "check out" on your websites. the smartest thing is to compare Google's results to the actual results you get. there defiantly is no %100 there.
From my own experience is 90% accurate, however is the most reliable tool. You may also would try marketsamurai it has some other tools that make it easier to use.
It a good tool but do not use only one , because you can see a different result when you use keywords tools and google insight to compare the keywords. If order to choose the best keywords, do not depend all on one keywords tools.
I think it really works but the thing is that some visitors just click on the ad without willing to visit the site or they find it attractive but later they change their mind to view the content. But what ever may be the reason they charge you. In this way it works. Sometimes you even get leads with it and sometime it will let you down.