Source: http://thetechblock.com/ios-updates-look...

Why iOS update is 75MB but requires 1.5GB to install?

The answer comes from Reddit user, StarManta who gives a pretty good explanation.

Because that 75 MB contains 3kb of changes to make to this 1MB file, and 2kb of changes to make to this 2MB file, etc etc. When it installs, it has to load the original file, duplicate it, apply the changes, and then return the file to its original place and delete the original.

So why don’t they just do this one file at a time, instead of doing them all at once? I am guessing this has to do with safety. If you do it one file at a time and the process gets interrupted, you can end up with a half-applied update and completely bricked phone. On the other hand, if you store all the modified files until the last second, there is a much smaller chance of the process being interrupted at a crucial point, and he phone can more easily fall back to its previous functional state.

So there you have it. Apple heavily compresses installation files to dramatically reduce the chances of your phone being bricked in the event something goes wrong. Is it a pain? Sure. Especially if you have to delete a bunch of stuff. But would you rather have a bricked phone? Probably not.

Hopefully Apple can find a middle ground in the future that prevents their devices from being bricked but doesn’t require so much storage to install. 16GB owners aren’t too happy right now.