Whitespace aka "air"
If you stuff your screens with knobs, buttons, and widgets for the user to interact with, your design will feel cramped. The screen will have bad feng-shui. Users will feel intimidated by all this stuff going on.
A good screen design is readable, like a book. One set of controls leads naturally to another. You can figure out how the program works just by looking at the screen.
Whitespace lets you create groupings without having to draw lines.
Part of a dialog box:
Boxes are very explicit ways of grouping things. They also serve no useful function except for grouping things together. The screen will still work without the grouping boxes. They are visual noise. Noise in the sense that they distract from the things they are grouping.
Since you have to move things further apart to make room for the box, you can often get away with not drawing the box. The extra space will do the job, without being as distracting as the box.
Less is more.
A more spacious layout is generally perceived as more relaxing. A screen where everything is packed together is tight and stressful.