Citadel space is an unofficial term referring to any region of space controlled by a species that acknowledge the authority of the Citadel Council. At first glance, it appears this territory encompasses most of the galaxy. In reality, however, less than 1% of the stars have been explored.
Even mass-effect-FTL drive is slow relative to the volume of the galaxy. Empty space and systems without suitable drive discharge sites are barriers to exploration. Only the mass relays allow ships to jump hundreds of light years in an instant, the key to expanding across an otherwise impassable galaxy.
Whenever a new relay is activated, the destination system is rapidly developed. From that hub, FTL drive is used to expand to nearby star clusters. The result is a number of densely-developed clusters thinly spread across the vast expanse of space, connected by the mass relay network.