The keyword density checker is a tool that first of all allows you to see how often a specific word occurs in a text. This tool can be used to count the number of words in a text, including a list of words that should not be counted. Suppose a text is translated into another language and the translation agency only calculates the costs for the translated words (and not for words such as your company name). This tool is then ideal to calculate the net number of words.
This tool can also be used for SEO to determine the keyword density of a text. This is the ratio of a keyword compared to the total number of words in a text. A too high keyword density can be seen as spam (which is not naturally). A too low keyword density may mean that the text does not sufficiently match the topic of the page. There is a lot of discussion about keyword density: it can in fact be measured compared to the total text on a page, but can also be calculated regarding to the content only. This tool is intended to be more as an indication.