Bit density generally means the storage density with which bits can be stored or transmitted. The term storage density or recording density is used for storage. Bit density refers to the number of bits that can be stored on a given unit of length or area of a storage medium.
Bit density applies to all storage media, electronic as well as optical or magnetic. In magnetic recording methods, higher bit density can be achieved by lower track density and by improving magnetic flux density. For LTO drives, bit density used to be around 5,000 bits/mm and has been quadrupled over the years to over 20,000 bits/mm.
It is different with transfer. Here, bit density is a measure of how many bits a carrier frequency can be modulated with, or how many bits can be transmitted in a given frequency band. Complex modulation techniques can be used to increase bit density. This is realized in some broadband and radio technologies.