Website benchmarking involves comparing a company's website to the most successful competitors in the industry. There are two types of benchmarking - offline benchmarking which involves comparing products and strategies, and online benchmarking which focuses on analyzing distinguished websites and user experiences. Benchmarking provides four main benefits: understanding user perspectives, grasping competitor trends, generating new ideas, and widening one's understanding of web trends. The document provides examples of both offline and online benchmarking.