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Put simply - it's the breaking up of a file into pieces so it can be saved to disk.

When you save a file, Windows simply looks for the first available free-space on the disk. It then saves the file - whether it will fit or not. If the file fits the free-space - end of story. If the free-space gets filled before the file is saved, Windows looks for the next available chunk of free-space and saves what's left of the file. The computer repeats the process until the entire file is saved.

Defragmentation - is a small program that uses existing free-space on the disk to 'join' all the fragments of a file together, before saving the file as one complete 'chunk'. If you have a lot of files on your hard-drive, it's a good idea to run defrag on a regular basis - that will help speed up the time the computer takes to process files.

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