The default yocto image is about 1GB after bitbake core-image-minimal.
The free space is couple hundred MB.
How to assign or increase it?
Let's say you want to add 8G extra then you can set following in local.conf
IMAGE_ROOTFS_EXTRA_SPACE_append = " + 8000000"
Another way to do is to set IMAGE_OVERHEAD_FACTOR
which will increase the size of image proportionally to the size of the content of image e.g.
IMAGE_OVERHEAD_FACTOR = "1.5"
will multiply the original size with 1.5 to create the final image.
also read through documentation for details.