1. I think he means so that boot-time files and such are placed at the beginning of the drive, then other files in terms of their usage, or something like that and giving you a 'performance boost'. Personally, I think 'optimization' is a waste because I've found you rarely get any extra performance, especially with newer hard drives, and it kills the hard drive faster.
2. You can do this with CCleaner, also offered as freeware by Piriform.