It doesn't optimize --i.e., move all files to the front of the drive. It will defrag, but it leaves contiguous files spread all over the drive.
No, it doesn't. If you run DEFRAG with the legend turned on, it clearly identifies files that belong at the front of the drive and files that belong at the end. When the defrag is completed, you'll have a bunch of stuff at the beginning, a smaller bunch of stuff at the end, and a lot of empty space in between. The only things it won't touch is whatever files (operating system?) it says "Can't be moved." Those stay right where they are -- which is why anytime you upgrade the operating system it's a good idea to clean out, defrag and optimize the hard drive before allowing the upgrade to spread immovable files around because it's filling in unoptimized gaps.