It does make me wonder where did the rest of the space in a Windows CD go to? I mean they needed a full cd for it and it wasn't even a live cd. And React OS should atleast have most of WinXP's features and yet is much smaller. What did microsoft use the rest of the space for?
ReactOS ships with more translations than any Microsoft Windows. But translation does take much space, it's just text in RC files linked to binary files.
Lots of drivers, for one, and a lot more functionality (the live CD certainly doesn't do Active Directory!).
Plus, everything in the base system is in two copies, one for the boot environment and one for the installed version, similar to initramfs and RPMs for Linux.