Available space increases but the file data is not deleted until that space is needed by something else.
The main reason any disk recovery software works is because files are not actually deleted from the file system. The space/sectors the files take up are simply flagged as “available” by the file system. Therefore more space is flagged as “available” and thus free space increases even if data still exists in that “available” space. So unless you go out of your way to deliberately overwrite deleted file data, it stays on the disk until that space is needed for something else.
That is why it is recommended that if you delete a file from the file system you should power off your computer and then reboot from another drive to run data recovery. Or if it is a non-system drive it’s recommended to not write to the drive at all in any way and just run the recovery software.
This is also why it is recommended that users use secure — delete or the option of filling free space with zeros — if they deleted sensitive files and don’t want to run the risk of the data being recovered.