All units of density are expressed in terms of their linear unit...with or without scaling...
by default, a unit is selected based on the linear unit of the projection definition of the input polyline feature data or as otherwise specified in the output coordinate system environment setting.
Which means, if your coordinate system is in meters (ie projected data) then area is in meters squared. The number of observations (N) per area unit is density, hence N per m^2. When N gets large, then area may be scaled up to hectares or km^2 and N gets scaled down in a similar fashion.. In short... basic math and ratios rule the roost
