Generally speaking, unallocated space is the space that is not used or allocated in an allocation unit, or cluster. Simply say is, it is a physical space on a disk that belongs to no partition. It is not useful to a disk unless you create a partition on it or extend this space to an existing partition.
If you disk has no such space available, that means each cluster is in use on logical or primary partitions. The unallocated space we are going to make is from the partitions already available, we have to cut some space from them.
Now, disk management will auto reload the disk map, and then you can the unallocated space with a star mark on it.
If you already a Partition Expert user, you can also do the same job to resize partition and make unallocated space.
What we often do on unallocated space is to Extend Volume to System drive on Windows Server 2003. Since We have the space now, we should know how to extend it to the partition we want to expand.