The space is a data structure built inside CMS and containing (idealy) all the data needed to generate a web page. Frankly, most of the data is placed into the space on demand. For example, when template engine finds a #nav()# tag, it calls a function which looks up for other pages and adds a navigation block into the space, then calls a navigation subtemplate and only after that returns execution to main template.
The space elements are scalars (simple data such as strings and numbers), arrays of elements and hashes of elements. The root of the space is always a hash. To access a member of the space, one must use a path, such as catalog, item/name, article/image.
Here is an example of the space (perl-style notation is used)