Settlement is crowded, we hear (4)
I believe the answer is:
pact
'settlement' is the definition.
(I've seen this before)
'crowded we hear' is the wordplay.
'crowded' becomes 'packed' (similar in meaning).
'we hear' shows a homophone (sound like).
'packed' sounds like 'PACT'.
'is' is the link.
(Other definitions for pact that I've seen before include "Settlement" , "International treaty" , "Formal agreement between parties or states" , "deal" , "Alliance" .)