Yes, Keyword Density is in some ways a concept of yesteryear SEO but I'll show you how it is not quite dead yet and how search engines work it today.
If you write an article about sausages and for every 100 words in the article you mention 'sausage' once you have a keyword density of 1%. Mention it twice in each 100 words and your keyword density is 2%.
Back in the day when search engines weren't very bright this was how they operated in trying to work out what a page was about - along with things like the title and meta description tags, keyword tag and URL.
But of course such a system was pretty easy to game. You just needed to sprinkle the word 'sausages' around enough and that is what you would rank for even if your page was about something completely different.
Yes and no. It surprises me sometimes to come across a page where a webmaster is trying to rank a page for a specific word or phrase but never actually mentions it anywhere it the contents. Yes, it really does happen, regularly!
So let's say you should have a keyword density of more than 0% - that still counts for something. 2% suggests your text is still easy to read. Go higher and its actually a signal that your text will be difficult to follow, distracting and probably of poor quality.
So keyword density is also a good measure of how well, or badly, a text is written. You cannot use the same word, or even similar words, that often without losing readability.
Search engines use Latent Semantic Indexing to understand the context of the page. Here they look for words similar to 'sausages' like 'bangers', 'frankfurter', etc.
They will also be looking for words they expect to find on pages about sausages (which they have gleamed from current top ranking pages) like 'skin', 'grill', 'spices', etc. That's why this page you are reading now might mention 'sausages' alot but it won't rank for that word! It is not in the overall context of the page or the website.
Sometimes there really is no way to reduce a high keyword density. A website that sells roses, for example, might mention the word 'rose' far too much on a page listing all the types of roses it has for sale and end up being treated with scamming suspicion.
But remember search engines also watch user behaviour. If users - on a regular basis - go to that rose website, stay on it, click around, add it to their favourites or even create a link from their website to it then the search engine has to conclude, "OK, I thought this website was scamming but user behaviour says it is above board - so no penalty here."
As with many SEO factors search engines must strike a balance between what their automated systems are programmed to spot and understanding the value of a page to internet users themselves.
Keywords (or words that mean the same as the keyword) should be:
Give your page a check to measure your keyword density (including words which mean the same) is not too low for your chosen keywords and phrases. If your text is easy to read you can virtually guarantee it will not be too high!
If you are on the low side edit carefully. Do not try and just put in a line like "sausage, sausages, sausage pictures" ... that is asking for trouble and is old school keyword stuffing in the extreme.
One type of page where keyword density often goes through the roof is lists, especially lists of products. If you have a list of pillowcases on your site the word 'pillowcase' may appear far too often for comfort.
There is no issue here as long as you make it clear to search engines that this is a list, not content. To do this:
I'm Tim Hill, a Search Engine Optimization and Online Marketing specialist. I created this site to help others understand that SEO is not a mysterious black art!.
If your a newbie try the Getting Started in SEO page, otherwise feel free to dig around and learn more.