"Disk space" is the total size of files on your site.
This includes more than your website files. It is also any files in your home directory, which could be: email, backups, web logs, and more.
Even within your website, many files get uploaded that don't need to be there: Thumbs.db files, original photoshop and illustrator files, editor backup files.
Rule of thumb: Most websites use less than 50 MB of disk space. An average website will use about 500 MB The large, high-use Tibetan websites i know of, use around 2,000 MB (2GB) of disk space.
The longer your website is online, the larger it will get.
I have never in 15 years of experience seen a website
Note: "Unlimited" just means, no limit unless you get so big that your site is putting stress on the server! If that happens, you will be encouraged to upgrade. (And if that happens, your site has become really big and popular ... so it's not a problem!)
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