You've asked one question, but seem more curious about another.
Sectional Density is actually one of the primary determinants of a realistic ballistic coefficient for a long range bullet design. That is how it relates to external ballistics.
What you really seem interested in is its effects on terminal ballistics. The short answer is that it partially determines penetration. SD gives you an idea of the force that a bullet exerts in PSI. It essentially describes the bullet's potential for preserving momentum when it hits something. Consider a small finishing nail and a 10 penny nail. Which one is harder to drive into a block of wood? The finishing nail focuses the force into a small area while the 10 penny spreads it out more. Bullets work the same way. Where this analogy and serious consideration of SD alone for penetration breaks down is when you start looking at expanding bullets. As a bullet expands, its cross sectional area increases and its sectional density decreases. If the bullet expands rapidly, its sectional density decreases rapidly and the result is decreased potential for penetration.
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