Keyword density is the percentage of times a keyword or keyword phrase is found in your page content amidst all the other content.For example, if you have a Web page with exactly 100 words on it including all headlines, captions, alt text, and advertising, and you have a keyword phrase that is on the page 4 times, your keyword density is 4%.!!!
Keyword density means how many times your website keyword appear in the web page. If it occurrence is high then your website content is more reliable to your website keyword and It can be crawl by the Google most.
I post-panda Google keyword density is not important at all. Just have your keyword in title, heading and somewhere in text. Use of LSI is good too.
I think the standard is it should be in such a way that it reads normally without stuffing the keywords, so something like 3 to 5%