Keyword density is the percentage of times a keyword or phrase appears on a web page compared to the total number of words on the page.
keyword density must be 2-6 not moe google will consideed it spame and will not give any weigth to your site.
No buddy, by no means 5% is 5 keywords, rather the density depends on the total number of words of the article and the total number of keywords. actually if you have the firefox plugin SEO quake for firefox, then you would get it clearly.