What does SDMA's space actually mean?
It means that in a multipath fading environment, the signal will have several dominant spatial paths from transmitter to receiver.  

From the perspective of a receiver, this means that the received signal will have components from several angles of arrival (AoA). 

MIMO techniques exploit this, and use joint beamforming between arrays at both the transmitter and receiver to send different data streams along these spatial paths.  To get the full multiplexing gain, however, these signal paths must be statistically independent. 

If the environment does not have any multipath characteristics (i.e. free space), then it is not possible to provide spatial multiplexing, and the best you can do with multiple antennas is conventional beamforming (CBF).