Why does it leaves free space so cluttered? No consolidation.

The drive was almost empty, but after complete defragmentation, free space is cluttered and not consolidated.

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To consolidate the files try running a 'Defrag Freespace' or 'Defrag Freespace (allow fragmentation)' from Actions>Advanced, it may take a while to complete on a 1TB drive.

This explains the difference between the two options:

https://www.ccleaner.com/docs/defraggler/using-defraggler/defragmenting-free-space-on-a-drive

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Actually I tried that, but with not much success. It only added fragmentation to some files.