Fragmentation happens to a hard disk over time as you save, change, or delete files. The changes that you save to a file are often stored at a location on the hard disk that's different from the original file. Additional changes are saved to even more locations. Over time, both the file and the hard disk itself become fragmented, and your computer slows down as it has to look in many different places to open a file.
Disk Defragmenter is a tool that rearranges the data on your hard disk and reunites fragmented files so your computer can run more efficiently. In this version of Windows, Disk Defragmenter runs on a schedule so you don't have to remember to run it, although you can still run it manually or change the schedule it uses.
Source: Windows Help Center