Spacing should be scaled to align with component size. Smaller components need less breathing space, larger ones need more. Related content should be grouped together.The same page header at two sizes:
Heading level 1
Large text lorem ipsum dolor sit amet consectetur adipiscing elit. Vivamus iaculis ut neque sit amet egestas.
Heading level 2
Standard text lorem ipsum dolor sit amet consectetur adipiscing elit. Vivamus iaculis ut neque sit amet egestas.
Condensing content makes it harder to read and scan. That trade-off can make sense in some contexts, but should be considered carefully. Also consider what you show, not just how you show it. Simplifying, reducing detail and removing unnecessary content makes products easier to use.