Keyword density is an important measurement that refers to the number of times a keyword appears in relation to other words within a web page. In other words, if a page consists of 100 words and the word "Google" appears twice in that list, then "Google" has a keyword density of 2%. Keyword density can also be applied to strings of words, usually two- or three-word phrases. For example, the 100-word page consists of 99 two-word phrases, so if the phrase "Google AdSense" appears once, then its keyword ratio would be just over 1%.
You want the important keywords on a page—the ones you want emphasized—to have the highest keyword densities. Very high keyword densities—anything over 10%—get flagged by crawlers as probable indications that the page is not a legitimate content page. Pages that engage in keyword spamming use high keyword densities in an attempt to gain better rankings, but most search engines detect the spamming and actually lower the page relevance as a result. A safer range for keyword density would be between 2% and 5%.
A good free tool for checking the keyword density of a web page is the Keyword Density and Prominence analyzer. You can also buy keyword density analyzers of various kinds, including tools to help you rewrite your text to give keywords more prominence.