Defrag will not give you significant space. All it can do is NOT by concatenating files (this does not save any thing), but it MAY move SMALL files (lower than 1KB) into the MFT (if you use an NTFS filesystem), where the cluster size is reduced to units of 1KB (the MFT is allocated differently than the rest of the disk).
Defrag will attempt to reunite the MFT in less fragments, this does not save space but helps getting faster access to its content (it is actually a single file in NTFS). The NTFS filesystem driver first allocastes all files created in the MFT until they reach the 1KB limit there they are moved out of the MFT and allocated elsewhere using the standard cluster allocation strategy (where clusters are typically larger)
In the MFT you save space because several small files may fit into the same 1KB entry.
But anywhere else, the clusters are left with unused sectors at end of files (those clusters are never shared by multiple files, except if those files are linked by "hard links", i.e. they share exactly the same content.
When you get low on disk storage, large files (more than 1KB) may also be placed in the MFT, but they will be fragmented into the MFT. Defrag will attempt to move these files out of the MFT, if there's space for that on the rest of the disk. Otherwise it will attempt to restructure the MFT so that the file fragments in the MFT will be grouped together. Defrag will also attempt to readjust the MFT size to adjust what is needed.
Hoever if your system is formatted with FAT32, there's no such strategy of placement: the same cluster size is used for all files independantly of their size, and all files have the same cluster sizes. Also on FAT/FAT32, there's no support of hardlinks for files with shared content, so FAT/FAT32 wastes more space.
FAT/FAT32 also has no support for storing security ACLs and other extended attributes. However it can store "long files names" and Unicode filenames using tweaked directory entries (in addition to the short "8.3" filenames using the legacy OEM 8-bit encoding which has no support for many characters, and does not allow distinctions of filename extensions: the short filenames are also very slow to generate). FAT32 is also much slower as directories are not indexed at all and must constantly be scanned forom start to end to locate a filename.
NTFS is then much faster than FAT32 and more efficient in general, in addition to allowing safer operations (becuse NTFS is journalized and lost fragments on NTFS after an application crash are extremely rare: the journal helps restoring the filesystem integrity automatically on reboot)
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If you get low on disk space, the best you can do is to cleanup your files, moveing your files, photos, videos to another disk.
Yoy may also want to use some cloud storage (SkyDrive, Google Drive, Dropbox...) to store your data online (but access to these files is generally very slow compared to local storage, unless you have a very good Internet connection, and onlien storage may be expensive above some volume as you'll get a monthly bill).
But consider buying an additional drive (it may be an external drive connected to your PC with a USB cable, or a drive attached to some multimedia device on your local network, such as a connected TV, some Internet routers that embed a multimedia player).
If you add an internal disk, probably it will be much larger (and faster) than the current one you have, and you may migrate your system completely to this new drive. Some drives are sold with a migration tool.
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If your internal disk is a SSD, it is generally small (often 128Gb or lower) and you need an additional hard disk for storing other documents: use the Windows "Files Explorer", open your user folder, and move your "My Documents", "My Videos", "My Images" subfolders to another disk where you'll have created a new folder (named like your user name) to store these personal files. (First make sure that no files in "My Documents", "My Videos" and so on are not open in an application). The file explorer will update the link to "My document to use the external drive instead of C:
This way is generally the best thing to do if you need to store lots of musics or videos that rapidly take up much space on drive C:, because a large SSD is generally very expensive.
Hard drives are really cheap. They are simple to install but you need a USB cable and USB port to connect them if you can't fit them in your PC.
Most applications may also be installed on the external drive without significant loss of performance. Keep your SSD for the system or the base of your user profile (where the user registry is stored) as it is accessed very frequently.
You may still create a user account on the external drive directly instead of the default: instead of creating a user account on the default C: drive, use the "administration tool" for "Users and groups" and create the user account from there: you can specify where the profile (and all its attached subfolders "My documents", "My videos"...) will be stored. Once the user account is created, logoff and long on to the new account, and start moving files from the previous user account to the new one. When this is done, you can drop the former user account using the control panel for users (but note that you cannot drop the user account on which you are currently logged on).