The keyword density is simple put that what words your site has the most used. If its a gaming site, you want to have as much words of game or gaming in it as possible not making it sound weird. Its not extremely important though.
keyword density is the percentage of times a keyword or phrases appear on a webpage compared to the total number of words on the page.
In Science, density is defined as Mass over Volume. In SEO world, Density is defined as number of keywords over total number of words. For example, If you count the number of "you" words in this page, you will find out that there are: 100 "you" in this page with over 10,000 words.
Keyword density is a combination of the number of times a keyword or a keyword phrase, in proportion with other words, appears on a Web page. The more times the keyword appears in relation to the total number of on page words, the greater the overall keyword density. The more times that other words appear, the lower the proportion of keywords, resulting in a lighter keyword density.
The keyword density tool is useful for helping webmasters and SEOs achieve their optimum keyword density for a set of key terms.