Not simply 'blank space', whitespace is required to let the graphical and typographical elements exist in the desired composition. The print industry has largely contributed to the illusion that empty space is wasted space. Every square inch of room in a newspaper or magazine costs money and it can't make that money back if it's not filled.
It's a natural reaction for a client to feel that empty spaces on their websites also NEED to be filled. This is not the case on the web. The space is endless and doesn't really cost anything. Effective use of whitespace allows the user's eyes to be drawn towards the important elements of the page. Filling up every gap is a guaranteed way to dilute the effectiveness of the page. The more your website breathes, the better the experience for your user.