If you mix 50 ml of water with 50 ml of ethanol, the total volume actual equals less than 100 ml. The reason the mixture does not add up to 100 ml is because the molecules that make up ethanol are smaller than the molecules that make up water. So, the ethanol molecules cram themselves between the water molecules. As a result, the volume is less than expected. The volume adds up to approximately 96 ml. A great way to think of how this works it to think of a container of sand poured into a container of rocks. The sand fills in the empty spaces between the rocks.
As the volume decreases, the density increases for the same mass. As the molecules pack tighter together, the solution becomes more dense.