
The idea of "space" in a mixdown is a funny, and slightly nebulous concept, but basically it's about making things have their own place, and making certain groups of sounds (for example, your drums) sound coherent with each other. There are a few ways of doing this; panning is the most obvious - move a sound left or right - but there are other tools you can use too. Reverb can create an atmosphere, and move something back from the front of the mix, as can use of dynamics processing (or avoiding it!) and even delay.
But first, let's look at panning. It's the simplest way of separating sounds out, and creating a more interesting mix. Panning something to one side can be a great way to catch the ear of the listener; and is very useful for effects, percussive noises, pads, and other things that support the overall sound. In general, you should have the really important things in your mix (kick drum, snare, bass, lead vocal etc) panned centrally - you wouldn't want them to disappear on a mono club system - but after this you can shift things around subtly. It's often useful to pan fairly major sounds just off-axis, for instance 20-30% of your pan-pot's travel. This stops them contributing so much to the clutter, but won't make them seem distractingly off centre.
Less important sounds can be panned much harder; incidental bleeps and FX can safely be moved right off to the side, and certain percussive sounds like tambourines can support hard panning too. But remember to be balanced about it; if you move your tambourine to the left, move a shaker or bongo off to the right. A lop-sided mix will not only sound odd, but if one channel is significantly louder, will reduce your ability to get a decent volume from your master.
Reverb is a more complex beast but there are a few simple things you can do to help your mix. First, consider that the point of reverb is to make something sound like it's in a particular place - a room, or a hall, etc. So it's not always a great idea to have lots of different reverbs in a track - you may end up with everything sounding like it's coming from 10 different places at once. Start by setting up a short reverb (maybe around half a second) and sending certain drum sounds to this; snares, claps, maybe hihats. Mix it very quietly (and then turn it down a bit more) - you should find that it gels your percussion together subtley. In general, it's good to use a reverb on a buss instead of individual channels; it ensures that things are using the same space for coherency, and saves on CPU power.
Larger reverbs can be used for properly "placing" something rather than just gluing things together; it can work especially well on pads, strings, lush sounds, chords, and sometimes vocals. A large reverb will push a sound "back" in the mix. As such, using one on a busy part, or a part that requires impact, may just clutter the sound and stop that part having the punch it needs. Bear in mind also that another way of pushing something "back" is simply turning it down. It's qualitatively different, of course, but one can easily get into the trap of putting a large reverb on something, then turning it up because it's now so far back in the mix. So it's important to play around with the level of the reverb tail, and not go overboard with it. Sometimes the pre-delay setting on your reverb will create most of the effect you want; letting you keep the reverb level down, so try different settings here too.
Like a reverb, and in particular like the pre-delay, you can use an actual delay plugin. Use a very short delay time (tens of milliseconds), set it so that the delay signals lose some high frequencies (most delay plugins offer this function) like they would in a real room, and set the wet signal very quiet. This will give the effect of room reflections, but often without some of the muddiness you can get from a reverb.
Lastly, and it sounds simplistic, but dynamics are crucial too! As mentioned, louder things sound more towards the front the mix. This much is obvious, but the upshot is that if you compress your sounds, they lose dynamic range, and they become loud from start to finish (think of a snare that you've squashed the transients from - it's now like a block of sound). The effect is that everything is at the front of the mix, and all your hard work with delay and reverb is negated, because your tracks are squashed into one small dynamic space. So lay off the compression if you can, let your sounds breathe a little, and they'll be much easier to place.
Space in a mix is a complex beast, and it's not something you'll master straight away. But by trying some of the techniques above, you should start to make some headway into more balanced, natural sounding mixes. So give it a go!