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Depending on the policy settings you select, SQL Defrag Manager defragments tables and indexes in one of the following ways: 

Rebuild

The To rebuild the indexes on tables, the rebuild defragmentation type option uses the DBCC DBREINDEX command to rebuild the indexes on the tables. ALTER INDEX REBUILD command for SQL Server 2005 and newer versions. For SQL Server 2000 it uses DBCC DBREINDEX.  The rebuild operation creates new, contiguous pages. SQL Server 2005/2008 allows the option to Rebuild Online, which allows access to the tables before the operation is finished. However, choosing to rebuild online requires more resources (disk space, CPU, memory), and may slow performance. 

Reorganize

The reorganize defragmentation type uses the DBCC INDEXDEFRAG command to To reorder the leaf pages of the index in-place, the reorganize defragmentation option uses the  ALTER INDEX REORGANIZE command for SQL Server 2005 and newer versions. For SQL Server 2000 it uses  DBCC INDEXDEFRAG . This process is similar to a bubble sort. Although the pages are physically reordered, they may not be contiguous within the data file. This issue can cause interleaved indexes, which need to be rebuilt to store them in contiguous pages.

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Interleaving occurs when an index extent, which is a group of eight index pages, is not physically contiguous because an extent for another index is intermingled with it. This condition can happen even when there is no logical fragmentation in the index. Although the pages may be physically and logically ordered, they are not necessarily contiguous. Switching between extents can impact performance as data access is inefficient. To resolve this issue, use SQL Defrag Manager to rebuild the indexes to store them in contiguous pages and reduce the need to switch between extents.