hm, good question. Density is just another word for "level of consciousness". The TP do mention that spiritual development is the main purpose of physical life. The TP talk about the "filtersystem" with 9 levels corresponding to "levels of consciousness" (and also planets). The purer one become the less filtering is needed. And also the higher on the scale one climbs the wider the range of incarnation choices become within the galaxy. As long as you are a 3rd density being you can only "choose" from the bottom level (level 1 planets). 3rd density is as low as you can go really. 1st and 2nd density are simply very "animalistic" or "ignorant/unevovled/evil/destructive" human beings or perhaps planets that can be compared to "stone age" level of development.The language of TP is very very different than most of the other sources you mentioned Mannz, even though there are so many subjects in TP that touch the working of things, unlike other aliens they never mention densities and energies in the sense presented by other sources of other alien civilizations. What's different here according to your opinion?
Once you are a higher density being you can still "return" to lower density planets (like Michel have done for example). This serves two main purposes:
1) It is, or can be, a very "hard/though" lesson for the soul/being (who now has become used to much "better" conditions) and thus if one "succeeds" one can make huge leaps up the scale by choosing this kind of experience. The "veil" is so thick on 3rd density planets that higher beings "forget" their "heritage" and "eternal identity" at incarnation. The risk is that they do not succeed in regaining consciousness of this and thus "loose their path" so to speak. Since "negativity" is so common on 3rd density planets that it is more or less the norm all around in some form or another (subtle or less subtle) it is easy to "condense" ones karma into one lifetime here and thus get rid of a lot of rubbish in a short timeframe. If this is the experience choosen it can be very hard. It all depends on how high you aim on the scale what you will have to go through. Some higher beings are simply on a "mission" here and will perhaps not go through so much trouble as others.
2) If the being do succeed he/she will serve as an example/inspiration for others (not only on this planet but on others too). And as Hawkins point out also; there needs to be higher level beings here to "balance out" all the "negativity" from the masses of people in lower 3rd density. More or less the whole spectrum is present at any given time. Picture it like a pyramid... Avatars/Masters on the top (600-1000), "holy persons" or "saints" below that (500-599) and great artists/philosphers/scientists etc. below that again (380-499) and thus it continues down (do not take this too literally. It is just meant to give a little overview. One can be anywhere on the scale and still be a totally "anonymous" being of course). Density or "levels of consciousness" is not in conflict with the 9 level filtersystem described in the TP. It is just another way of talking about the same thing the way I see it. That is why I have used Hawkins scale as "yardstick" and tied the "density" concept up to this scale also.