Why are Linux installs bigger than I've read? Some beginner questions

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http://unix.stackexchange.com – I've read in different textbooks that say Linux is light-weight(e.g. It could fit on a 1.4MB floppy). So why is the download from the Ubuntu or Fedora CD sized or larger? Do the device drivers extend the kernel? For example: if I have new hardware and I have installed the device driver, will my kernel code get extended or is the driver installed as a service for the kernel to use? When using a LiveCD such as Ubuntu, when system boots does all 700MB of the OS get loaded to RAM or just parts of it? I ask these questions because I feel they're common beginner questions and I think it would be (HowTos)