Unallocated Space

Unallocated Space is available disk space that is not allocated to any volume. The type of volume that you can create on unallocated space depends on the disk type. On basic disks, you can use unallocated space to create primary or extended partitions. On dynamic disks, you can use unallocated space to create dynamic volumes
If the operating system writes a file to a certain space on the hard drive that part of the drive is now “allocated”, as the file is using it the space, and no other files can be written to that section. If that file is deleted then that part of the hard drive is no longer required to be “allocated” it becomes unallocated. This means that  new files can now be re-written to that location.
On a standard, working computer, files can only be written to the unallocated space.
If a newly formatted  drive is connected to a computer, virtually all of the drive space is unallocated space (a small amount of space will be taken up by files within the file system, e.g $MFT, etc). On a new drive the unallocated space is normally zeros, as files are written to the hard drive the zeros are over written with the file data