It isn't. My theory is that crime density by land area alone probably gives a decent estimate of how the area feels to live in. IE: if there's an assault or robbery every week in a one block area where you live, it's going to feel like a seedy place to live regardless of your personal risk of being involved in a crime.

I doubt there's an objectively right answer as to how to best normalize this - I think it just matters that it be understood by the user what it means. There are a number of ways to normalize it depending on what you care about.