Why is (central) space so good?
At the top levels of chess, space is an absolutely huge asset. The exploitation of such an advantage is often rather slow, at least until a mistake is made by the opponent that allows a decisive initiation of tactics that are likely to favor the guy with space, who should have superior piece activity, as in this game.
A lot of times space doesn't seem so bad to play against. For example in the hippo black's position looks really bad (and maybe it is), but white players often have a hard time breaking it down. That however doesn't change the fact that black's pieces there are too passive to do really anything, that is until white makes an impatient, unnecessary mistake that loosens his position maybe a bit too much. That can be all it takes for the position to collapse. But if treated right space is very, very strong.
In fact this game with Fritz has actually made me dislike every single hypermodern black opening. I think they give white way too much space, and really, all you have to do when you have a space advantage is make ONE HUNDRED percent sure, or as close as you can get, that black can't challenge it in a favorable way. The big problem with not only allowing a space advantage but not challenging it early on is that while both sides develop, guess who will be more free? The guy with more space, for a very simple reason: he has more options for his pieces! The guy with a lot of space can often develop all of his pieces quite easily, and this includes the heavy pieces, which often have easy access to the central files. If black were then to challenge the center, he'd be allowing it to open, and that favors the better developed guy, which will be white.
When you have space, in this case more space in the middle, you don't want to force immediate action unless otherwise your space will be challenged (like in most openings; but here we will assume the guy is a turtle and will in hippo style wait for you to leave an opening: something you need not do, ) with ...c5 or something; what you really want to do is develop and see how your opponent likes having crappy pieces! If you are really well developed, then you probably can gain space on the wings, as even if the pawn center is challenged you may well be able to transform it into a piece center, because your pieces are so active.
The key is just to stay patient, carefully gain more space within reason, and proceed to strangle the opponent.
The only exceptions when space may not be favored, is for one thing if the guy with space isn't well developed as has some loose squares and pawns. If the player with less space has a temporary edge in development, he needs to do his best to tie white down to any weak squares he may have, and ideally force him to develop his pieces awkwardly, rather than harmoniously, which is what usually happens. If the guy with space is tied up, then his pieces are not truly free because they're all on defense; in that case the guy with less space would actually be more free and active! But you need strong pressure to achieve this.
Also, of course, if you can get into the holes left behind. I used to love seeing juicy dark square holes, but a lot of times, even this is not enough. If you only have, say one piece on a nice square, which may be a hole created by the pawns advancing, it in itself may be underwhelming enough that the guy with space can basically just leave it there and work around it. So holes shouldn't be overestimated, as it's not like occupying them will automatically destroy the position; you need something a bit extra, like central pressure, weaknesses to attack, big development lead, maybe a couple more occupied holes, stuff like that, because if you just let him develop in peace, his pieces will simply be much better and will have a more or less permenant advantage.
To anyone who wants to say I had better defense after 13...d5: I had gone over this with fritz but I don't remember everything but what I do remember is that the computer confirms there was no way to get out of trouble after this mistake. From move 14 on other tries merely lose in different ways. For example, the ...gxf6 recapture may avoid allowing the passed d6 pawn but still loses a pawn with a wretched position.