Drive fragmentation occurs when files are broken into multiple parts that are saved in different locations on a hard drive (HDD). This causes processing speed and performance to decrease. To remove fragmentation, the HDD needs to be defragmented using the automatic tool in Mac, which consolidates files under 20MB, or a third party software like Stellar Drive Defrag for larger files. Defragmentation eliminates unused space and improves reading/writing speeds, but should not be done too frequently to prevent shortening the hard drive's lifespan. Backups are also recommended before defragmenting in case of data loss.