Smashing Magazine explains white space well:
Most designers know the value of white space, which is the empty space between paragraphs, pictures, buttons and other items on the page. White space de-clutters a page by giving items room to breathe. We can also group items together by decreasing the space between them and increasing the space between them and other items on the page. This is important for showing relationships between items (e.g. showing that this button applies to this set of items) and building a hierarchy of elements on the page.
White space also makes content more readable. A study (Lin, 2004) found that good use of white space between paragraphs and in the left and right margins increases comprehension by almost 20%. Readers find it easier to focus on and process generously spaced content.
In fact, according to Chaperro, Shaikh and Baker, the layout on a Web page (including white space, headers, indentation and figures) may not measurably influence performance but does influence user satisfaction and experience.
So why do you as an engineer / project manager need to consider this?
Giving your layout / design adequate white space starts with the wire frames / prototypes that we create for most of our projects. Since prototyping is essentially the first step of page design (because you determine a rough layout, elements on the page, etc), giving your items on a page adequate white space will help you and your client to determine the right amount of content and layout of a page. It will help your architectural decisions, because you can determine from your prototype how good the page flows, how well information is perceived, what elements are more prioritized than others, etc. So please allow for enough room when prototyping and make sure that clients with a lot of content to cram onto one page, understand why it is important to let the content breath.