You can see where I am, but you can't see me.
You can't see whitespace itself as it's the absence of pixels/ink/etc., but you can see the unfilled gap it occupies.
Creating me by hand you let the hand free.
To create whitespace by hand you, well, just don't draw or write in it.
Creating me by tools you use the largest one.
Space bar is most often used for adding whitespace. Other keys that also create whitespace - TAB and Enter - are also larger than other keys that actually create characters on their own (SHIFT/CapsLock are bigger but they are modifiers, not character inputs in their own right).
I make my cousins be more clear to everyone.
Whitespace between non-whitespace characters (the cousins) makes the text far more clear than it would be without whitespace.
The shortest valid answer would be invisible.
The shortest whitespace is a CR, which cannot be seen at all as it leaves no actual space behind.
Turn my white light off - I'm incomprehensible.
whitespace is something altogether different.