The rest you can store in the cloud
Which only works if you're on a system that has reliable internet access and your user is capable of setting up some sort of account credentials and is willing to go through that process any time they're playing a game on a different system. Remember who the target audience is here (young chlidren).
It's plenty of space, roomy in fact, for quite a lot of useful data structures.
For an embedded programmer, sure. Most of the people making console games nowadays have no experience programming for a system that doesn't effectively have as much storage space as they could want. Out in the non-embedded world, I've got preference files for text editors that are larger than 4k. I've seen save game files that are dozens of megabytes.