The mass density and the optical density are two different quantities. The mass density is mass / volume and optical density is based on refractive index of the medium. We know that if i and r represents the angle of incidence and refraction respectively, then refractive index µ = sin i / sin r for that medium

The mass density of kerosene and water are 0.81 gm/cm³ and 1 gm/cm³ respectively. The refractive index of kerosene and water are 1.44 and 1.33 respectively. As kerosene has more refractive index than water, it is optically denser. The mass density of kerosene is less than water, so kerosene drops will float in water, when both are mixed.