There are a lot of factors that go into SEO and how high a page or post will rank. This includes things like: domain name, long tail keywords, images, videos, annotations and keyword density.
SEO becomes a delicate balance of this and a few other factors such as LSI keywords, headline tags and a few more. Of course, Google does not reveal what exactly goes into their algorithm, heck, none of the major search engines will, but, one of the most mis-understood is keyword density.
Keyword density gets a bit of focus because it relates to the old saying, “Too much of a good thing.” What is density? It is simply how many times your primary keyword is used in the body of the page or post. This reminds me of the story of the 3 bears from Little Red Riding Hood: not too little, not too much, but JUST RIGHT.
All of the major search engines use keyword density as a factor in how high any given post will have based on the targeted term. In this presentation from Google Webmasters over at YouTube, there is a pretty good review of exactly how to maximize the effectiveness of density, but not overdo it.
Original Source: There is a great resource section from Google over on the Google Webmasters page on YouTube. Original video presented by Matt Cutts
