Comment on SEO Myth Keyword Density by Mark Biernat.
Keyword variation increases natural relevance – I believe that onsite or offsite keywords (titles are links remember) – However, if you go higher in the percentage of exact keyword phrase matches for your whole site, this is bad. If you are low with tangential flirting on the same theme but not exact matches this is good.
I think Google has two ideas in their formula, one is yes matches are good (relevance), the second being if the site as a whole has too many pages or post written with exact matches for popular searches (or maybe simply too concise title) in the title (percentage wise) this way it sends a flag you are trying to game the system. The ideas are diametrically opposed on one hand but as a whole it works well for them.
My idea (I could very wrong) is not just repetitive but exact keyword matches are bad. That is if you target the phrase “WordPress SEO” This would not be your title (which is link, not because it is not relevant but, it is too exact. I rarely see exact keyword matches rank any more as well as phases.
Further I think Google scans a site as a whole and gives it a percentage rank,(maybe I am wrong on this) and if the site is composed of short titles with exact keyword matches on popular searches (like eHow the poster child of Panda) than you get a penalty. It tries to use LSI and natural people writing for the good bucket.
If 50% of your site is short titles with exact matches you are not going to rank as high.
This is a different idea than Long-tail because spammers try to rank for 2 to 3 word phases, not 5 to 7 word phrases. So I have a theory even though on the relevancy side good will rank a page high if it is short and dense in the title, it will rank the site with a dampening factor if too many are short titles.
Varying keywords in links (internal and external) as well as onsite things like H tags in your related post etc keyword phrases is important for SEO because it helps the broad algorithm concept of relevance without being spammy or stuffing.
I know I know these things, but on my sites I have not had time to relevant, hence, I believe Google is looking at these sites as more cookie cutter (not good) or keyword repetitive. It is about really using your theme to leverage relevance which in a sense liberates me to simply write in a natural style.
I am using thesaurus.com to help stimulate creativity about different ways to express myself.
Therefore I have a lot of work to do on my sites which means going back and making it more interesting and natural and using the tools you have given us to make this easier from a structural side.