The Master File Table (MFT) is a database where file and folder metadata--- information on size, time and date stamps, permissions and so on--- is maintained on NTFS-formatted drives. Every single file on your system has at least one entry. The more files and folders you add to your drive, the larger your MFT becomes. When you delete files, space is made available for re-use in the MFT, but the MFT itself never shrinks.
Because a fragmented MFT is slower than an unfragmented one, some percentage of the drive (12.5% by default) is reserved for the MFT to avoid fragmentation. Each volume of an NTFS drive has two separate areas: a space set aside for the MFT (as well as very small files) and another space for all other files and folders.
If the MFT fills up its own space, the file system will grab more of the "regular" space and assign it to the MFT. Because it's very unlikely that adjacent space is available, randomly located space will be used for the spill-over MFT, while some part of the MFT remains in the originally allotted space. In other words, the MFT will be divided into more than one piece--- it will be fragmented--- and your system's disk access will become slower.
If, on the other hand, the "regular" space fills up with data and applications, the file system will start writing files to the MFT area. As the MFT grows over time, it will have to position itself around these "regular" files--- and the result again is that it fragments itself.
Note that a fragmented drive also increases the size of the MFT because a drive in that condition needs additional records to keep track of all those file fragments--- a kind of software feedback loop, with more disk space consumed at each turn.
You can see how MFT size, MFT space size, and defragmentation of both the MFT and the disk in general are all connected--- and all affect disk performance. If you want maximum performance, you'll want everything defragmented--- including the MFT--- and that requires plenty of elbow room in both parts of the disk.
Making space for--- and defragmenting --- your MFT and your hard disk are highly desirable and recommended.
Any utility that messes around with the MFT while Windows is running would likely cause serious problems. That's the benefit of utilities like Diskeeper. Version 10 features a boot-time utility that safely defragments the MFT and paging file (a.k.a. "swap file").
Diskeeper 10 has a tool for configuring the MFT that gives you the option of preemptively increasing the size of the MFT space (note that once you've increased the size, you can't decrease it without reformatting). It also uses a variety of metrics (including available disk space) to estimate a good MFT space size.
Are there risks associated with defragmenting your MFT and increasing MFT space? There is always at least a small chance that something could go wrong whenever you make changes to system files. But the risk of not doing anything about fragmentation is probably higher. And, as always, you should give yourself insurance in the form of quality backups.
Here's a bonus tip for optimizing the MFT: Never "convert" a drive full of files from FAT to NTFS. When you do this, the MFT will almost certainly be placed at some random location on the disk, and possibly in a fragmented state. It's better to reformat the drive using NTFS, because the reformatting process assure the MFT will be placed by default on the faster part of the drive. Once it's formatted, you can copy the files to drive, and you'll end up with minimal initial fragmentation.