Absolute must have! In a former life I was a trader and the Bloomberg terminal has some very dense displays which are all stunning. Far too many sites and apps use very padded cards and sections which make for a very poor “data/ink ratio” [1]. Allowing the user to density the display with settings options fixes it.

[1] https://jtr13.github.io/cc19/tuftes-principles-of-data-ink.h...

Providing user UI flexibility is never a "problem".

Obviously there is a tradeoff - there is always a tradeoff in software.

Having just gone through a re-design, our team's tradeoff was how much time to spend tweaking media-queries/screen-size responsivity for the countless permutations of device-resolutions & dpis vs just picking a handful of density-levels.

"One size does not fit all" is a common phrase for a reason