Windows Update needs a lot of disk space, which is a problem on devices with small amounts of internal memory. Microsoft fixes this by "reserving" some disk space for updates in the next version of Windows 10, code name 1
Microsoft has been running cheap laptops with small hard drives for many years now. But the one who has ever used one has quickly become a big issue: They usually do not have enough storage left to install large updates. This leaves them without important patches, security fixes and new features. While not updating to the latest version of Windows on the first day, you want to get there. So this is a serious problem.
Right now, the solution is to either remove as many files and programs as possible or download the update to external storage space. Neither answer is always easy, especially for a college student who has a cheap device, no USB device and a need to keep all of their files and programs.
Microsoft is trying to address this with a method that is bound to be controversial. Starting in the next big release (and available to Insiders now), Microsoft will reserve at least 7 gigabytes of space on your hard drive.
The space will not be completely wasted. Windows stores temporary files here when space is not needed for updates. Files created by apps and processes that would have taken space anyway will now enter this reserved storage space. When it's time to update, Windows automatically removes all files in reserved storage space and uses the update file download site.
Microsoft says it doesn't use a virtual device for this to happen. As Microsoft's Craig Barkhouse explains in the TechNet comments:
Instead, we designed an elegant solution that would require new support to be added to NTFS. The idea is that NTFS provides a mechanism for the service stack to indicate how much space it needs to be reserved, say 7GB. Then NTFS reserves 7GB for service use. What is the effect of it? Well, the visible free space on C: drops by 7 GB, reducing how much space normal applications can use. However, service can use the 7 GB.
How much space is reserved depends on the optional features and languages you have installed. The more functions and languages on the system, the more space will be reserved so that these functions can be updated correctly. If you later uninstall a function or language, the reserved space will shrink.
Microsoft says that reserved storage space should start at about 7 gigabytes and go up from there.
Theoretically, this space may have been used in any case and the users are "not losing anything. But some users have once again less than 7 gigabytes of temporary files. These users see less space available everywhere.
Windows 10 19H1 comes likely to be released in April 2019.
via Mary Jo Foley / ZDNet
It is a compromise that helps some people while reducing available storage for others.