I know that density matrices are one way to describe a quantum system. We can write the density matrix of a system as:
$$ \rho = \sum_{\alpha} p_\alpha |\psi_\alpha\rangle\langle \psi_\alpha |$$
I'm a little lost on how to interpret this. I'm consider the following example where I have $| \psi \rangle = c_0 |0 \rangle + c_1 |1 \rangle$.
In this case, my density matrix can be written as :
$$\rho = |\psi \rangle \langle \psi |$$ I interpret this as: this is a pure state (since I can write it as a single outer product) and, in this basis, the population in the state $|\psi\rangle$ is 1.
However, if I now expand this out, I get:
$$ \rho = |c_0|^2 |0 \rangle\langle 0 | + |c_1|^2 |1 \rangle\langle 1 | + c_0 c_1^* |0 \rangle\langle 1 | + c_1 c_0^* |1 \rangle\langle 0 |$$
In this case, I interpret the diagonal elements to be the populations of the $| 0 \rangle$ and $| 1 \rangle$ state, but the rest, I'm not entirely sure.
My main question: How do I interpret a density matrix? What do the "coherences" on the off diagonal tell me about my system? Can I interpret this as some sort of mixture that, in this basis, tells me I have some of my system in the $|0 \rangle$ state and some in the $| 1 \rangle$ state?