Apart from the use of ligatures, the horizontal placement of individual characters can be optimized. For example, an “e” next to a capital “Y” can be shifted somewhat to the left, such that this e can shelter a bit under the roof provided by Y. This looks better to the eye compared to the standard horizontal space used between characters.
The horizontal shift of a letter that depends on the letters surrounding it is called kerning. An optimal distribution of space is thus achieved. This results mostly in sentences occupying slightly less horizontal space. LaTeX kerns automatically:
The difference is small but can be visualized using some red lines:
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