Windows 98's Defrag goes further than the Win95 version by noting the most frequently opened programs and offering the option to assign them to sectors which are accessed fastest.

There is little point in using "Rearrange program files .." on a drive or partition which contains only data and no programs. But it does no harm to have this as the Default setting for all drives (ie "Every time I defragment .."). With this option selected Defrag looks at the logs it keeps in the   \Windows\Applog   folder which record how often particular programs are used, and moves the most-used to the beginning of the drive for faster access.
Note: This may affect how other Disk Management programs (eg Norton) perceive and report the defragmentation status of a drive. It is most unwise to use more than one defragmentation utility.

The first time Defrag is run with "Rearrange program files .." it will take a long time as it will be re-organising a lot of files. Thereafter it will settle down, until you change your habits, use other programs more often or use newly-installed ones.

Note that you can only access the Defrag Settings if you run "Disk Defragmentation" from the Accessories / System Tools menu. If you access it via My Computer / Drive / Properties and choose ScanDisk or Defrag, Defrag will not offer the "Settings" button and will operate using the Default. Should you wish to do a fast defragmentation, or simply not wish to use the option to re-arrange program files, ensure you open Defrag via the Start Menu, therefore.