Windows registry is its core, constantly modifying and growing in size. It's being altered each time you install/remove programs or config system settings. Such changes made to Windows registry cause it to grow in size, no matter whether new information is added or deleted from registry. Thus registry quickly loses its linear structure which results in increase of application response time and registry access time.
"Registry defragmentation" performs physical defragmentation of the Windows registry file. After defragmentation your registry will acquire linear structure which will reduce application response time and registry access time. "Registry defragmentation" also removes unused entries, thus making registry even smaller in size. Do not worry if sometimes after defragmentation the registry will become smaller only by 1-5%, the key is not in size but in its linear structure, hence it determines access time.
Usually you'll have to use "Registry defragmentation" when new program is installed/removed. You should perform defragmentations regularly, because registry's linear structure is quickly lost and as the time runs on it only becomes more non-linear. With this aim program package includes special sceduler which can help you to organize such regular optimizations.