Explaining further, "Additionally, over the last several releases we've reduced the size of Windows for most customers". The reserved storage functionality is an attempt by the company to solve the woes arising out of the installation.
What's very important to note is that Release Preview insiders are still on Windows 10 October 2018 Update (version 1809), so this cumulative update could actually be an early version of a later release that may become available to everyone in mid-January. To do so, simply go to Settings Apps Apps & features Manage optional features.
The precise amount of storage that gets reserved will vary, depending on how you use your PC.
"When apps and system processes create temporary files, these files will automatically be placed into reserved storage". This is especially important for devices with limited storage space, and have nearly all of them used up.
The storage reservation is to ensure that certain critical operations-most significantly, installing feature updates-always have enough free space available. As a result of this fact you are probably going to feel a little constricted by this new update, although most people are probably going to appreciate the time that Microsoft will be saving them thanks to the 7 Gigabytes that has been set aside. Similarly, installed languages that aren't needed on a Windows 10 PC can be deleted to reduce the space needed by Reserved Storage.
But Microsoft has now confirmed that the activation issue was caused by a change made to its activation and validation servers, which also took effect on Tuesday. If there's still a space problem for users, even with Reserved Storage in place, the OS will suggest how they can free up space or use a USB thumb drive to carry out an upgrade. Possibly, that's one reason why Microsoft has been taking these steps to slim its update payloads.