Until relatively recently in computing history, games (and all other programs) were small. Hell, Pokemon Gold fits un a floppy trivially compressed, together with a working GBC emulator. I can trivially fit rePalm unto a floppy and leave enough space for a great PalmOS RTS - "Warfare Inc"
I disagree with your blanket statement. The vast majority of (commercial) PC games were never that small, even in the 3.5" heydays. Most games required 2-10 disks.
Off-topic: regarding Windows NT emulation challenge, now IA64 and AXP32/64 target are also somehow filled.