On-chain volume counts settlement, not trading. A trader buying and selling ten times on a cex produces one on-chain deposit and one withdrawal, so the two figures answer different questions and should never be compared directly.
Adjustments matter. Raw totals are inflated by change outputs, internal exchange shuffling, and wash-trading-crypto, so most analytics providers publish an adjusted series that strips self-sends and known internal transfers. Use the adjusted one.
What it is genuinely useful for is confirming whether price moves are accompanied by real settlement. Large rallies on falling on-chain volume suggest activity concentrated in derivatives and exchange books rather than in coins actually changing hands.
Related: active-addresses, exchange-netflow, on-chain, wash-trading-crypto