De-fragmenting your hard drive will essentially organize it. Over time, your computer leaves files lying around (imagine a child's bedroom, over time collecting toys all over the floor) and rather than cleaning these files, the computer moves around them (as the child does until the room is cleaned) when you run it.
Does this mean your files will be in different places after you complete the process? No, not at all. The files the computer rearranges are ones that you do not see or use. Maybe one day computers will be smart enough to clean up after themselves, but until then, you'll need to follow these steps and do it on your own.
To learn more about the importance of defragmenting your hard drive, read John Lister's article How and Why should I Defragment my Hard Drive?