Table Fragmentation

When rows are not stored contiguously, or if rows are split onto more than one block, performance decreases because these rows require additional block accesses.

Note that table fragmentation is different from file fragmentation. When a lot of DML operations are applied on a table, the table will become fragmented because DML does not release free space from the table below the HWM.

HWM is an indicator of USED BLOCKS in the database. Blocks below the high water mark (used blocks) have at least once contained data. This data might have been deleted. Since Oracle knows that blocks beyond the high water mark don't have data, it only reads blocks up to the high water mark when doing a full table scan.

Refer: http://orafaq.com/node/1936