Most densely populated areas on the planet? No… not even close.
The Gaza strip is around 6000 people per square kilometer and only 360 square kilometers, that puts it 5th in the world in terms of population density for entire countries. However, 6000 people per square kilometer is not dense for such a small area. Kolkatta in India is 306 square kilometers, and 29000 people per square kilometer. Bogata in Columbia is the same. Even major cities like Metro Paris is 4000 people per square kilometer and around 700 square kilometers in size.
There’s a difference between “around civilians” and literally storing weapons and living in residential apartment buildings and residential homes. There are absolutely places in Gaza that are open space where they could set up. Go look at a satellite map of the Gaza strip, there’s farm land, there’s industrial zones, there’s small chunks of just nothing. Hamas is actively choosing to setup in residential areas because it’s part of the “Guerilla Warfare 101” handbook.