What does it mean when a place is densely populated?

Population Density is basically a measure of how many people live in a certain amount of space.

For instance - if in Iceland the population density is 3.1 people/km2, then on average there are 3 or so people living in every square kilometre. Obviously, the density will vary depending if the area is urban or suburban.

If a place is densely populated it basically has more people living in smaller space!