Original PS3 models came with as little as 20GB or 60GB of space.

Smaller files are easier to obtain for users with capped or slow internet connections.

Highly compressed files are simpler to move between a PC and the console via USB drives. Is "Highly Compressed" Actually Better?

Whether a compressed game is "better" depends on the type of compression used. Not all small files are created equal. 1. The Good: Lossless Asset Compression

Game Asset Storage, Loading, Compression and Caching | PH3 Blog

The primary driver is the sheer size of the PS3’s Blu-ray library. Unlike its predecessors, PS3 titles can range from a few gigabytes to nearly for behemoths like The Last of Us or God of War III .