According to many authors, a fluid is defined to be incompressible if the material derivative of the density is zero, that is to say, that in an frame of reference following the motion of an air parcel, density doesn't change. This in turn means, according to the continuity equation,
so that . So far so good.
However, let us consider a simple case in 1D in which the density is of the form and . Both fields satisfy the continuity equation. This is more evident if we use the other form of the continuity equation,
Clearly, for the velocity field that I gave, , and the fluid is incompressible, but as we can see, density changes with time and space. Moreover, at a fixed position (i.e. in a stationary frame of reference), density would change with time.
So, does density depend on the frame of reference? What's the real definition of compressibility in fluid mechanics?