The performance of a FAT partition can become considerable deteriorated due to fragmentation, which is why there are tools to repack, or defragment, a FAT partition. However, no such tools come with NT, and the NTFS disk format cannot be defragmented using DOS FAT-format tools.
Microsoft have always maintained that NTFS doesn't need a defragger tool, that it is effectively self-defragmenting, and that because it is a sensible operating system, such problems just won't arise.
And, to an extent, they certainly have a point. All of the dreadful "large floppy disk" heritage of FAT format is gone, replaced by a properly designed and structured file system that has similarities to some Unix filesystems.
Many of the NTFS performance features are barely documented, although most are definitely in the realms of "standard accepted practise" for sensible disk systems.
So NTFS does things like elevator seeking, whereby the head movement is minimised. Imagine a situation where app one wants some data from track 1, then app two wants some data from track 100, then app three wants some data from track 20, and finally app four wants data from track 60. Imagine that all the requests are made almost simultaneously. The read order would be track 1, track 100, track 20 and finally track 60 which is inefficient because it requires three head movements that need changes of direction. NT resequences the reads so that the data is read in the order Tracks 1, 20, 60 and then 100. The correct data is then sent back to the relevant applications. If it was a FAT partition being read by Windows 3.x, the head reads would be in the originating order, not the optimized one.
Another example where NTFS scores over FAT is that the directory appears to be stored in the middle the disk, so its at the optimum position for reading. Compare this with FAT where the directory is at the first tracks.
When it comes to storing data, NT does some clever tricks with NTFS. For example, if the amount of data is small (less than around 2 KB or so), the data is actually stored in the directory entry itself – no separate disk file is created for the data.
And NT tries to find a slot big enough for it – it doesn't just start writing at the beginning of the disk, hopping over existing data as necessary.
Finally, NT seems to leave space before and after a file, to allow it a bit of room to grow without causing defragmentation. The net result, however, is that it appears that an NTFS disk can go into defragmentation when the disk isn't nearly 100% full. Imagine the scenario with a cleanly formatted FAT system of 1 GB in size. You copy 900 MB of data onto the drive – the data is written sequentially starting from the beginning of the disk, and there should be no fragmentatation. Because NTFS appears to leave guard space before and after files, the disk can be "full" (from the perspective of fragmentation) well before a full disk's-worth of data has been written.