Map documents (.mxd files) are compound files. The information describing the map, layout, and any embedded objects saved in the map is organized into units called storages and streams. When you save a compound file, the streams can become fragmented in a process that is analogous to hard disk fragmentation. This can make the map document larger, though it does not increase the likelihood of the document becoming corrupted. The more times you save a map, the more chance that fragmentation will make the document larger.
Using Save As and selecting a new file name creates a new document with no fragmentation. You can save a fragmented map document as a new document to reduce its file size.
Note: This article was written for ArcGIS versions 8.x and 9.x. Later versions of ArcGIS may contain different functionality, as well as different names and locations for menus, commands and geoprocessing tools.