Air density is a computation mainly dependent on the temperature, barometric pressure, and the humidity of a volume of air.
Temperature in the USA is generally measured in degrees Fahrenheit, barometric pressure in inches of Mercury (inHg), and humidity in percent of Relative Humidity.
You can relate to how these factors effect the density of the atmosphere by using a balloon to simulate the earth's atmosphere. When a balloon is filled with air and placed into a refrigerator it begins to shrink, this is due to the drop in temperature of the air inside the balloon. As the air cools it releases energy and slows down,because the air molecules are not bouncing off each other as much, they remain closer together and more of them will now fit in a smaller area. The opposite will occur if the balloon is heated.
The effect of humidity is a little more complicated. A change of humidity in the atmosphere is caused by a change in the amount of water vapor mixed in with the common gases already present in the air. As more water vapor is put into the air is displaces these gases. The water vapor is also less dense (weights less) than the gases in the air. When we take air that is at a set temperature and pressure and start introducing increased amounts of humidity we begin to cause the overall density of the air to decrease. Therefore, the density of the air is the greatest when there is no humidity.
Changes in temperature, pressure, and humidity can have different amounts of effect on the associated change in air density. A change in temperature or pressure causes a proportional change in density. In other words, a 1% change in temperature causes a 1% change in density. Again, the effect of humidity is more complicated, because the effect of humidity on density is also dependent on the temperature. A 50% increase of humidity when the air temperature is 70f degrees may cause a 1% decrease in total air density, but a 50% increase of humidify when the air temperature is 90f degrees may cause a 2% decrease in total air density. This effect is due to the fact that it takes lot more water to cause 50% relative humidity at a 90 degree temperature than it does at 70f degrees. The humidity must also be considered in that it makes up some of the density of the air, but it has no value being there.
The air in the earth's atmosphere is made of various gases and water vapor. Neglecting the effect of pollution there normally is 20.9% of oxygen, 75% of Nitrogen, Carbon and very small amounts of some other gases. Oxygen is the most important gas in the atmosphere as far as an internal combustion engine is concerned. This is due to the fact that the oxygen is used to burn the fuel placed in the chambers of the engine. When more oxygen can be placed in the chamber it allows one to also place more fuel along with it and therefore create more power. The air density relates to this because when the air density increases the amount of the combined gases and water now fit into a smaller area, this includes oxygen. If the air is denser than there is more of it therefore more amount of oxygen will be taken into the engine.
The term commonly heard among racers is "density altitude". Density altitude is the density expressed if feet instead of grams per cubic centimeter. It's a lot easier to relate a change of density in a couple hundred feet rather than a change of 2.534 g/cm^3. The use of density altitude is taken from the U.S. standard atmosphere table. This table relates the density of an average day at sea level (59 degrees, 29.92 inHg) and how it changes at different elevations in the atmosphere. As one climbs in altitude the density falls off at a predetermined exponential rate.
In conclusion I highly recommend either an Air Density Gauge or a Altimeter as tools to be used for adjusting your Fuel Curve and Ignition Timing. I firmly believe that these items are essential for tuning at the Race Track