Why are applications, on average, increasingly requiring more storage space?
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Other answers are good, but to really drive home the basic reason: almost every application nowadays is built on top of a framework and use various “off-the-shelf” tools. These frameworks and tools save tons of time in development, but they can add an incredible amount of bloat (except in the exceedingly rare case you use every single feature of the framework).
When projects get compiled, the application is embedded inside of framework code and a full copy of the tools is included in the compilation. This is much more convenient than having the end user attempt to manage the references to the framework and the tools.
For instance, you want to build an app that works on iPhone and android. You could hire a couple of developers to create both an iPhone and android version of your application. Or you could take advantage of one of many frameworks that compiles to iPhone and android. You trade off some optimizations and add a little bloat, but the choice is clear. Let’s say you want to allow users to login with their Twitter account, Google account, or a basic username and password. You could spend months writing that code, and inevitably end up with security issues – or you could implement a vendor library that handles authentication for you in a few hours. Perhaps you want to turn user input into excel exports.. you get the idea.
The biggest trade off is development time (and often cross-platform compatibility).
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