Habitat fragmentation relates to biodiversity loss primarily through habitat destruction and its implications.
Habitat fragmentation requires some degree of habitat destruction. Although habitat fragmentation certainly differs from total habitat destruction, there is effectively less land for biodiversity to thrive after a habitat has been fragmented. This results in since there is less of a habitat for organisms to thrive in.
After habitats are fragmented, each fragment of the once continuous habitat can only support a fraction of the population that the whole habitat could. Often, especially when species are incapable of crossing whatever obstacle fragmented the habitat, this lower carrying capacity causes many organisms to die, as the fragmented habitat transitions into its reduced carrying capacity.
Additionally, when populations are thus isolated and reduced, the lack of genetic diversity makes these populations more vulnerable to disease. Consequently, habitat fragmentation leads to a reduction in biodiversity.