How does defragging increase hard disk space?

Simply put defragging doesn't really create any free space on your hard disk. It may appear when you look at the graphics that defrag programs show you, that the disk looks like it has more space, but all you are doing is moving data about not removing any. Any hard disk space gain is negligible and is caused when the defrag program puts together half clusters of data. Clusters can hold a number of files, but if not filled the next file is started at the next cluster. If a file is broken into pieces around the hard disk and defrag can put the file back into a single cluster, or just save a cluster somewhere a small amount of space will be released.