Yeah jac and others have explained it very well and clearly, also it helps to go to "Scan disc" first for any errors..
I think it does help quite a bit, i had awful clusters and bad sectors but after doing about 3-4 defrags (diffrent times of couse) it helped alot and there all gone *im pretty sure, hope so*
So it kinda saved me, in diffrent times also, so it does pay off,
Tho now when i defrag dont noice much change really but yea it all deppens'