Compression
My first computer came with a doublespace-compressed drive (unknown to me as a naive 15yr old), complete with DOS 6.22 & WFW 3.11 + Office. One day after saving my pocket money, I returned home with a boxed copy of Ultimate Doom, and couldn't wait to play it. I think it needed 15mb or so disk space, and my machine proclaimed that I had 25mb free space on my 250mb drive.
Lo, Doom would not install, complaining about lack of disk space. I set about making a boot disk, and on firing the machine up with it, found a huge file called drvspace.bin or something similar, that was 115mb.
Feeling proud of myself, I deleted the file, installed Doom, and played away.
The next morning, switching on the machine to discover "Non-system disk or disk error" still haunts me to this day :-)