Hello!
Density matrix is a matrix that describes the expectation value(L) of a of a state vector from a quantum subsystem which is a part of composed entangled system.
If you have two systems, each with it's own space of states HA and HB, the density matrix simply gives you the information of one of the subsystems from it's own point of view, the second system being just a simple observer and not interfering with any measurement done on the first.
For determining <L>A from HA X HB (note the product state of the entangled system): <L>A = <ψ(x’y’)|L|ψ(xy)>.
<L>A = Σxy ψ*(x’y’)ψ(xy)Lx’x. Here <x’|L|x> = Lx’x = are just the matrix elements of the observable. If we apply δy’y for <L>A (this means we just replace y' with y), we get Σxy ψ*(x’y)ψ(xy)Lx’x. Now we sum over the eigenvalues of the eigenvectors of the second system y (the observer) just so the first system won't have a dependency on those values, so we can truly measure LA. Therefore<L>A = Σy ψ*(x’y)ψ(xy) Lx’x. ρx’x = Σy ψ*(x’y)ψ(xy) is the density matrix and the more non-zero eigenvectors you find inside the matrix of ρ the more entangled the system is. Maximum entanglement is when all eigenvalues are non-zero, equal and of the 1/n form (n being the dimentionality of the space).
NOTE: Σy = sum over y, since I don't know how to put the value under the sum.
Hope this helped!