What does "crowding mushrooms" mean?

It's not the mushrooms that are important, it's the "crowding" -- basically, you don't want so much food in the pan at once that the bits are packed tightly, or in more than one layer.

This is especially important for items that give off a lot of water as they cook (like mushrooms), or that you're trying to get to crisp up, as you want to leave space for the moisture to evaporate and escape without causing the food to steam.

This is old-school advice, and mostly wrong. When sauteeing vegetables, it's important not to crowd the pan, or many of the vegetables will steam, and become soft, without getting the benefit of browning from direct contact with the pan.

But mushrooms aren't vegetables: their structural protein is lignin, not cellulose, so they react differently. You can crowd mushrooms, and they will release a lot of water and steam themselves, but they won't become soft like steamed vegetables. As long as they make contact with the pan after all the water has been driven off, you can crowd them as much as you like and it will make no difference.