Like every other living organism, each plant requires a certain amount of space. When you buy a packet of seeds you will notice planting distances mentioned in the sowing instructions. Individual plants generally grow bigger if they are spaced out more. However, you may get a bigger crop from the same area of land by having the plants closer together. You could test this by trying different spacing when growing radishes. These grow quickly so you do not have to wait very long for a result.
Weeds compete with other plants for space. They can choke out young plants by robbing them of there nutrients, water and sunlight . It is important to control weeds around plants to enable them to grow properly.
Roots also need to spread out to hold the plant up and take in water and nutrients. If roots do not have enough room bound and eventually die.