> OFDM squeezes more carriers into > the same space by making the carriers orthogonal > to their next door neighbors.
Its not only the "next door neighbors" but ALL the carriers. If you look at the the ofdm signal with a correctly timed FFT with exactly a symbol time length, there is NO overlap of the carriers. That is how domodualtion is done. But if you look at the the ofdm signal with an fft of incorrect length, or not proprly timed (including phase-change symbol boundaries) the carriers will overlap quite a bit ! Your waterfall display is such a randomly timed fft of incorrect lenght. The advantage of this system ? each subcarrier can change it's phase (and amplitude) much faster than a carrier of limited bandwidth could do, but during "symbol integration time" there is no carrier overlap, the orthogonality remains perfect. One example of a bandwidth limited subcarrier system is RDFT. in contrast OFDM does NOT limit the subcarrier bandwidth !
