This is a simplified example of how inbreeding can lead to genetic defects. Edit: In response to your question, inbreeding doesn't "create" genetic defects, it leads to a situation where preexisting genetic defects are more likely to be present on BOTH chromosomes rather than just one chromosome. read more
The isolation of a small population for a period of time can lead to inbreeding within that population, resulting in increased genetic relatedness between breeding individuals. Inbreeding depression can also occur in a large population if individuals tend to mate with their relatives, instead of mating randomly. read more