This is an adjective derived from the noun crowd. A crown is a large group of people. Crowded means full of people.
Whether or not you think a place is crowded is very subjective, based on your culture and you personal preferences. If you've grown up surounded by a lot of people, or in a culture where being close together is important, you may feel more comfortable in a crowded place. For someone else, though, a bar could feel crowded with only a few people. What about you? Do you prefer crowded places, or quiet ones?
This image of NYC from www.safran-arts.com