I have heard roto-tilling in massive amounts of woodchip produces a no-irrigation garden.
Problems I see with that:
1. fungus buildup
2. nitrogen deficiency.
3. Requires a very cheap source of
wood chips.
Supposedly the person advocating it said that there is a nitrogen dip and then things get stabilized. Don't know about the fungal build up. I would also be interested in his soil type.
Hugelculture supposedly helps, but I still have water-stressed plants on top of my own, so I can't vouch for that technique 100%... I must be doing it wrong.
Personally I don't follow the "space the plants" method. I had 4 months of no rain. The plants just seem grow very slow but for the most part they stay alive if they are planted tightly.
The "permaculture response" is that yes, spacing plants make it possible to reduce water needs -- but it also provides niches for other, aggressive and plants who can fair much better than your hybrid tomato plant (who is, generally, a wimp). So
permaculture design would have you evaluate how much you want to weed, maybe more here and less there, and space accordingly. It's not an either-or.
The other potential responses/factors: diversity of root structures, diversity of plant functions, diversity of annuals/perennials/cultivated wild plants, diversity of time when each plant is drawing the most from the ground, tap-rooted plants that bring up moisture, microclimate: the effect of shade and reducing wind effects on the soil surface, reducing wind and dryness around the leaf (more wind and less humidity on leaf means more transpiration).
And then I run out of ideas...
edit:
compost can be used as a mulch, especially in dry weather.
William