and has no file fragmentation meaning that there is less space wasted
Because there is no fragmentation it does
waste space. Fragmentation happens when small pices of big files get into small free spaces on the disc.
So, if you delete a 2GB game in the middle of your WBFS partition and you install a 3GB game the Installer will put it at the first free space with at least 3GB, this is not the 2GB space you made free before. So if you don't have other games under 2GB you will loose this space forever. So it does waste space. On a Fat partition the first 2GB would go into the 2GB free space and the last GB into the next free space.
This is all written on the asumption that the one who said that WBFS does not fragment the files is right.