It's actually a bit of both.
If you're only punting a few quid for beer & holiday money then a proxy from one of the major retail shops will suffice. Most of them provide weightings data these days if you're running a live a/c. When all said & done at that level you're only looking to get a general feel for the mood.
But when you're upping the ante with your sizing & you're seeking more confirmation at specific price levels, then it stands to reason you're going to require much more accuracy & relevance to that data, which the higher tiered price suppliers are able to provide.
It's collected & processed from both retail & non-retail & run side by side as a separate program, accessed as & when required to offer a clearer snap shot of where the biases are & how strong a position the individual wants to take based on the objective at outset. Be it an intraday punt or a longer-term gamble.
At any one time they can see where the brunt of retail is sitting & get a clearer feel of where the majority of higher tiered punters are at. If they're both leaning heavily on one side (because institutional aren't always right by a long shot), they can wait till their usual triggers begin unwinding & gear up on size accordingly. Either that, or dial in a larger pyramid stake if the profit objective is in reasonably close proximity. The aim of utilising anything like this is to offer choice & flexibility.
It can work both ways don't forget. You can use it to bat away from key session or round number levels via the shorter range set up sketcher explained in his post higher up, just as well as it can be applied to the usual directional momentum set up.
With the right, or should I say, more relevant information to hand, it becomes a man-for-all-seasons kind of deal.