Hyperspace technology allows research into propulsion systems that power much larger ships and also allows for much faster travel with better fuel efficiency. Each level of Hyperspace technology also increases cargo capacity by 5%.
In theory, the idea of hyperspace travel relies on the existence of a separate and adjacent dimension. When activated, a hyperspace drive shunts the starship into this other dimension, where it can cover vast distances in an amount of time greatly reduced from the time it would take in "normal" space. Once it reaches the point in hyperspace that corresponds to its destination in real space, it re-emerges. Once a sufficient level of Hyperspace Technology is researched, the Hyperspace Drive is no longer just a theory.