Games specifically primarily take up space due to art assets. A high fidelity modern AAA game full of thousands of 4k+ textures, super-high-poly models, detailed animations, and hours of high quality audio is going to take up a lot of space. There are certainly optimizations to be had, but there's no way a 60GB+ game today would ever fit on, say, a DVD, at the same level of fidelity while maintaining the same player experience.

Higher compression means longer load times, so there's incentive to not compress more than absolutely necessary, and the biggest games tend to have huge worlds, which means you can't hold the whole world in memory at once. So you have to stream it in.

It's a constant balancing act between your nominal hardware target, the space the game will take up, up-front load times, and the amount of stuff that can be in a scene before the hardware can't keep up and you get model/texture streaming pop-in, stuttering, or an otherwise degraded player experience.

Perhaps in the next few years we'll see games leveraging super-resolution AI to quickly produce usably high-res textures from lower-res installed ones in storage faster than a directly compressed equivalent could be.... or games will leverage the same to take what they already ship and make it even higher detail...