Also games for PS5 is actually smaller then on PS4, even with the higher details. Ant not like just a tad smaller, but in some cases more than half the size. Next-gen games doesn't have to have the same assets multiple times, as last-gen games did, to make it work with a traditional slow 5400rpm drive. Also PS5 uses some really nice compression tech, that can be decompressed on the fly.
Sony did the right thing, by shipping it with 825GB, keeping price down. But still keeping the option, so people who wants it, can add storage them self. You can get compatible 1TB drives now for under 150$, imagine how cheap they will be in a year or two.