Defragging your hard drive moves parts of fragmented files (fragments) together so the drive's read circuitry doesn't have to search all over the disk to access a given file. More intensive defragging moves related files together for the same reasons. Defragging regularly results in smoother operation and fewer opportuities for read/write errors. The more often you defrag, the less time it usually takes to do it at any given time because you haven't given it as much time to become fragmented.
Defragging wouldn't help much if you don't have enough memory for your applications, but it would slow defragging, which requires a bit of memory activity. If you're also short on disk space, you could run into other problems because, when defragging, the system needs additional disk space to be able to write and rewrite the data while moving it around.
Defragging doesn't usually thrash a drive unless there are other problems with the drive or within the system, but if you didn't back up your data, you violated the first rule of data security. Assume things, including hard drives, can fail, and act accordingly.