How is it that ships made largely of steel can float when the density of steel is much higher than the density of water? Why is it possible to make oil tankers much larger than other ships (and what happens when an oil tanker is unloaded?)

Answer 1

The steel hull encloses a volume that displaces an amount of water with much more mass than the steel's.

The air in the volume weighs much less than the water it displaces, so the net effect is to make the whole shebang float.