Why recursive `let` make space effcient?

It’s easiest to understand with pictures:

• The first version

  repeat x = x : repeat x
  

  creates a chain of (:) constructors ending in a thunk which will replace itself with more constructors as you demand them. Thus, O(n) space.

  

• The second version

  repeat x = let xs = x : xs in xs
  

  uses let to “tie the knot”, creating a single (:) constructor which refers to itself.