Sparse disk image formats such as qcow2 only consume the physical disk space which they need. For example, if a guest is given a qcow2 image with a size of 100GB but has only written to 10GB then only 10GB of physical disk space will be used. There is some slight overhead associated, so the above example may not be strictly true, but you get the idea.
Sparse disk image files allow you to over allocate virtual disk space – this means that you could allocate 5 virtual machines 100GB of disk space, even if you only have 300GB of physical disk space. If all the guests need 100% of their 100GB disk space then you will have a problem. If you use over allocation of disk space you will need to monitor the physical disk usage very carefully.
There is another problem with sparse disk formats, they don’t automatically shrink. Let’s say you fill 100GB of a sparse disk (we know this will roughly consume 100GB of physical disk space) and then delete some files so that you are only using 50GB. The physical disk space used should be 50GB, right? Wrong. Because the disk image doesn’t shrink, it will always be 100GB on the file system even if the guest is now using less. The below steps will detail how to get round this issue.