Settlement crowded we hear (4)
I believe the answer is:
pact
'settlement' is the definition.
(I've seen this in another clue)
'crowded we hear' is the wordplay.
'crowded' becomes 'packed' (packing is a kind of crowding).
'we hear' shows a homophone (sound like).
'packed' sounds like 'PACT'.
(Other definitions for pact that I've seen before include "Formal agreement between parties or states" , "Agreement, covenant" , "'Accord, treaty (4)'" , "Treaty, formal agreement" , "Written agreement between two states" .)