A bunch of clever stuff goes into that! The entire world isn't really there at one time. Only the area you're in, and it will dynamically load the other areas when you get near. Reuse of assets and textures and stuff can make things way more efficient to store (e.g. storing one grass texture for every grass block in minecraft). Storage is just really optimized so you don't have to save a lot of data to represent the state of the world; just enough to rebuild world when you need it