When is it OK to crowd the pan?
First, you don't crowd the pan when sauteing. If you do it, you are no longer sauteing, because your food doesn't come in contact with the surface frequently enough. You also can't really keep the separate pieces hopping, the best you could do would be to throw it around as a mass (like a pancake turning), which means they'll touch the pan with one side only, if at all. 

Second, you don't crowd the pan while shallow frying and pan grilling or working on a griddle. If a piece of the food is not in contact with the bottom, it doesn't fry at all. 

Third, you don't crowd the pan when deep frying. If you do, the food cools the oil down and it starts seeping into the food, because it's not hot enough to crisp the surface within the first few seconds. 

You can crowd the pan when you are sweating the food. In fact, if you use too little food, it will probably start pan frying or at least roasting, and won't be able to sweat. 

You can also crowd the pan when you are braising the food. Else you would have too much water and will simmer it instead. 

Bottom line, crowding or not crowding is part of the technique. You decide when to use it based on the technique you want to use. If you don't do it right, the technique doesn't work.