What does "consolidating library" actually do?

When you consolidate, any songs in the iTunes Library that are not in the iTunes Music Folder are copied to the Music Folder and the Library is updated to point to those new files. Files already in the iTunes Music Folder have no changes made to them: Consolidating your library - Windows

Because it copies any songs that exist as originals in folders outside of iTunes then yes you can end up using up more space. However once all the relevant files are copied into the iTunes Music folder you can if you wish delete the originals

Consolidate looks thru your iTunes library, and for each song that is in the library but is not in your iTunes folder, it makes a copy in the iTunes folder.

After it has finished, you have used more hard drive space, but then if you wish you can delete the copies that are outside the iTunes folder and your disk usage will be back where it started.

It is usually used when people have files scattered around, and want to have them all in the iTune folder, either for neatness or to prepare for changing computers.

By the way, it does not look for files that exist on your hard drive but that lack a library entry. That is not its function, but is a frequently asked question.

when you say makes a copy to your itunes folder does that mean to the folder that you dsignate in you preferances? here is my problem, most of my music is on my external hdd but everything that i am buying today and importing today it is putting in the username/music/itunes folder when i want it to go in the folder that has the rest of my music, the folder set in the preferances part is the username/music/itunes but itunes does see the music i have in the other folder. should i just change the folder in my preferances to where i want the music to go and consolidate it all to there?

+"when you say makes a copy to your itunes folder does that mean to the folder that you dsignate in you preferances?"+

Yes, exactly.

+"here is my problem, most of my music is on my external hdd but everything that i am buying today and importing today it is putting in the username/music/itunes folder"+

New music that you import, or purchase from the iTunes Store, goes into the designated folder, without regard to where the rest of your music is.

+"i want it to go in the folder that has the rest of my music, the folder set in the preferances part is the username/music/itunes but itunes does see the music i have in the other folder. should i just change the folder in my preferances to where i want the music to go and consolidate it all to there?"+

Changing the folder in preferences affects future activity, but does not move anything that is already in place. It sounds like Consolidate is what you want. Make sure you read the link provided by Zevoneer so that you fully understand it; it takes a while to run and has no Undo.

it wont make duplicates in my library will it? maybe get rid of the duplicates that i already have?

It does not get rid of duplicates.

yep worked thanks for your help