At the Battle of Hattin, the army sent by the kingdom of Jerusalem was between 18,000 and 20,000 men strong, as a share of the population of the Kingdom this represent something between 2,7% and 4,1%.
I used the population numbers of the Wikipedia page of the Kingdom of Jerusalem and those of the size of the army on the page of the battle
If we use the highest population number and the lowest army size this make : 18,000/650,000*100=2,7%
On the contrary with the lowest population and the highest army size we have : 20,000/480,000*100 = 4,7%
I compared to size of the army to the population to show that it would have been a burden on the administration of the kingdom to organize and supply such an army without disrupting the livelihood of the inhabitants, but the kingdom was seemingly able to manage it without any issue since an army of similar size was dispatched 4 years earlier at the Battle of al-Fule.
Contemporary battles in Western Europe such as the Battle of Fornham, the Battle of Legnano or the Battle of Bouvines featured smaller armies mainly made of mercenaries or retainers when the states raising them were many times bigger.
Was the Kingdom of Jerusalem just more hard-pressed by its neighbors that it was forced to raise relatively bigger armies, or was it administered differently from its European counterparts so it had better organizational capabilities?
You’ve noticed something that historians have been grappling with for a long time too: ancient and medieval estimates of army sizes are often quite bizarre or obviously made up. For the crusades it seems like there’s no way the crusaders could have recovered from so many losses in time for the next battle, or without society collapsing entirely. Another problem is that, even if the size of the army is correct, we have absolutely no idea how big the rest of the population was.
The numbers in the Wikipedia article are probably fine...I haven’t checked but it’s pretty likely that I’m the one who added them, using the same sources I’m using here. The classic study of the population is by Josiah Russell, who calculated that all of Syria had about 2.3 million people at the time of the crusades, although most of them would have been outside of crusader rule. The population of the Kingdom of Jerusalem specifically has been estimated at 360,000 non-crusaders. The crusader population may have been between 100,000 and 140,000, or 15 to 25% of the total population, depending on how big the overall population is supposed to have been.
On the other hand it’s possible that these numbers are wildly overinflated. The problems were summarized by Ronnie Ellenblum:
“Not only do we not have any information about the size of the Latin population, but all other demographic factors are also unknown to us. We do not know the size of the whole population, what their age and sex distribution was, how many children a fertile mother might produce, the average life expectancy, the average marriage age, the death rate amongst children, the rate of death from illnesses and plagues, and other demographic details. Furthermore, the figures, of dubious veracity, given for the inhabitants of the large cities, include an unknown number of local Christians. The questionable measure of the size of the population of the large cities is based for the most part on descriptions of war and siege during which the rural population in the vicinity were also concentrated in the cities. The numbers given in contemporary historical sources are often grossly exaggerated and do not distinguish between the Franks and the local Christians. In such circumstances a real demographic study becomes only wishful thinking.” (Ellenblum, pg. 30-31)
As for the army, I’ve written about it in the past (How did the Kingdom of Jerusalem recruit troops for their rentinue?), but I can repeat the relevant bits here. The army was made up of the “feudal levy” of all men in the kingdom (when they needed a full-strength army), as well as knights from the military orders (the Templars, Hospitallers, and later also the Teutonic Order), and crusaders visiting from Europe, if any happened to be in the kingdom at the time (whether a small handful of soldiers or a huge crusade).
Skipping over the debate over the word “feudalism” (see the previous answer for more on that!), we have a lot of detail about the “feudal levy” thanks to John of Ibelin, who wrote about the laws (“assizes”) of Jerusalem. According to him, the king was at the top and there were four major barons below him, the Prince of Galilee, the Count of Jaffa and Ascalon, the Lord of Sidon, and the Lord of Oultrejordain (or the Transjordan). Those baronies had their own vassals as well, so the Count of Jaffa was a direct vassal of the king, but his own vassals were the Lord of Ibelin, the Lord of Ramla, and the Lord of Mirabel (John himself actually held all these titles, but they could be four different lords...theoretically...) And then these sub-vassals would have their own knights and vassals who owed them service, and likewise for the other three major baronies.
Each vassal owed a certain number of knights to the king, for example:
“The barony of the county of Jaffa and Ascalon, to which Ramla, Mirabel and Ibelin belong owes 100 knights:
Jaffa 25
Ascalon 25
Ramla and Mirabel 40
Ibelin 10”
(Edbury, pg. 165)
Adding up all the numbers in the entire list gives us an army of 5000 knights. Assuming each knight could bring an average of 10 foot soldiers with them, then in this ideal scenario, the kingdom could raise an army of 50,000 soldiers. But that's adding a variable that John never mentioned. What if they only brought 5 foot soldiers, or 2?
Another problem is that John was writing in the 13th century, long after the Kingdom of Jerusalem had mostly collapsed in 1187. His list refers to the sort of army that was raised (and destroyed) at the Battle of Hattin that year. Is also the size of the army that could have been raised (and, again, destroyed) at the only comparable battle in John’s time, the Battle of Forbie in 1244? Seems unlikely...
The army was often filled out by new crusades, or by smaller numbers of individual pilgrims/crusaders. But what if there was no influx of men from Europe? how did they replenish the full strength of the army? In that case we don’t really know.
One suggestion is that the numbers in the sources must be wrong, both in terms of the sizes of the armies and in the numbers of deaths. The Battle of Forbie in 1244 is a good example here. Contemporary participants had wildly different estimates for the numbers involved. The crusaders were allied with the Syrian Muslim states, against the Egyptians and their Khwarizmian allies. The patriarch of Jerusalem wrote that the Syrians numbered 25,000. He doesn’t say how big the crusader army was but he says 16,000 crusaders died. The master of the Knights Hospitaller also doesn’t give the size of the crusader army was but the Egyptian/Khwarizmian force was “ten times as numerous” and there were less than 100 survivors overall on the crusader side. The Egyptian historian Ibn al-Furat, who was writing over a century later, said 30,000 crusaders and Syrians were killed. How can any of these numbers be reconciled? It seems like none of them had any idea of the real numbers at all.
The modern military historian Ilya Berkovich estimates that there were actually only about 9000-12,000 soldiers from Jerusalem (plus another 3000 from their Syrian allies), and the Egyptian/Khwarizmian army was probably around the same size. The numbers of dead (and injured, and prisoners) are almost certainly exaggerated as well, because the kingdom didn’t completely collapse like it did after Hattin in 1187. There must have been enough survivors to defend the cities and countryside. It was a terrible defeat for the crusaders, but it’s unlikely that almost literally everyone died.
So, hopefully that gives you some idea of the kind of sources we have to work with and the problems with using them. For the most part we just have no idea what the population was, and the sizes of armies are almost almost exaggerated and unreliable. Modern historians try to give better estimates sometimes, but those are really just guesses too. The same goes for battles back in Europe too, those numbers are just as unreliable as any numbers for Jerusalem. For the crusader states it’s very likely that more people survived than we think, because otherwise every loss would be much more cataclysmic. But that doesn’t really help us understand the size of the army compared to the size of the population, because no one really knows what the population was in the first place.
Sources:
Josiah C. Russell, “Population of the Crusader States,” in Kenneth M. Setton, ed., A History of the Crusades, vol. V: The Impact of the Crusades on the Near East, ed. Norman P. Zacour and Harry W. Hazard (University of Wisconsin Press, 1985)
Ronnie Ellenblum, Frankish Rural Settlement in the Latin Kingdom of Jerusalem (Cambridge University Press, 1998)
Jonathan Riley-Smith, The Feudal Nobility and the Kingdom of Jerusalem, 1174-1277 (Macmillan, 1973)
Joshua Prawer, Crusader Institutions (Oxford University Press, 1980)
Peter Edbury, John of Ibelin and the Kingdom of Jerusalem (Boydell, 1997)
R. C. Smail, Crusading Warfare, 1097-1193 (Cambridge University Press, 1956, 2nd ed., 1995)
Christopher Marshall, Warfare in the Latin East, 1192-1291 (Cambridge University Press, 1992)
Edited to add a reference I forgot: Ilya Berkovich, "The Battle of Forbie and the Second Frankish Kingdom of Jerusalem", in Journal of Military History 75 (2011)