Maybe I'm doing things wrong but I've created a couple of sites recently, exact match 3 word domains so they are a perfect match to our product. The domain names are also the volume search term as reported by Google KWT. We have the number one ranking for the search term and the traffic levels are nothing like what is being reported by Google KWT, in fact the better volume and I mean 3 times the traffic is created by another term when checked in the KWT reports very few searches.(its probably more logical)
Main Term = [135,00] monthly searches returns 20% of traffic
Secondary Term = [1600] monthly searches returns about 65%of our daily traffic and we are not even in the top position.
Conclusion - Google seriously inflates its search volumes for what reason I am not sure. Maybe its a few reasons...