how it works
Crowding doesn't work on distance, but rather on number of objects (including players, trees, and dropped items) within a square.
At each point, 2 numbers are computed and the lower of the two is your crowding.
One of the two numbers is the number of objects within 500 feet (using a square, not distance) times 0.4%.
The other number is the number of objects within 250 feet times 1.6%.
example
In this example, the number of objects within 250 feet is 3 (even though object 'C' is more than 250 feet away distance wise), so that gives 4.8%.
The number of objects within 500 feet is 13 - or 5.2%.
Object N doesn't affect the crowding at all.
The crowding should measure as 4.8% - the lower of the two numbers.
(Please note - I wrote this off hearsay evidence and vague recollections of something once said on ENN).