What exactly is disk defragmentation and is it really that important?

Hi all,

I bought a new computer about 8 months ago, and I've always been very careful with it and am always looking to do what's best for it (in terms of maintaining and looking after it). I have never run a disk defragmentation before but I've read that it's important and can help make the computer run faster. My computer is not running slow or anything like that, but I've read that some people do it once a week...

So my questions is: What exactly does the disk defragmenter do, and should I do it even though my computer doesn't seem to have any problems?

I read this in an article on 'about.com', but I still don't quite understand what it means...

"Think of your hard drive like a file cabinet. If you're like most people, you've got your papers stored in alphabetized folders so you can find things easily. Imagine, though, if someone took the labels off the folders, switched the locations of all the folders, and moved documents into and out of folders at random. It would take you a lot longer to find anything, since you wouldn't know where your documents were. That's sort of what happens when your hard drive gets fragmented: it takes the computer much more time to find files that are scattered here, there and everywhere."

Does this mean that it re-organizes your files? Because if so, then that would very annoying, because I already have my files organized exactly the way I want them... or am I missing something?

Also, I have many important files on my hard drive, and don't currently have any of them backed up, because I don't have anything to back them up with at the moment... so I just want to know if there is any possibility for something to go wrong during the defragmentation and al my files be deleted?? (I know, I'm very paranoid, but like I said, I have none of my files backed up)

Thanks in advance :)