When you save a file, the data is placed on hard disk clusters, which are like little boxes that hold the information. Depending on how the drive is formatted, a cluster can hold about 512 bytes. If a 522 byte file is saved, it takes up one whole cluster with 10 bytes left over. This leftover amount is called cluster overhang. This excess information is placed in the next available cluster. Thus, a 522 byte file actually takes up 1024 bytes of space. If there is anything in a cluster, the operating system will not add any more data, since the cluster is marked "used".

DriveSpace and Stacker, two popular drive compression programs from years past, actually allowed the operating system to pack more data in the little unused spaces inside clusters, thereby adding (on average) about 25% more space.