Diskspace is the amount of diskspace allocated on your web hosting account. Similar to your PC diskspace, your web hosting diskspace will hold your website pages, images & video etc
How much diskspace you need is dependent on what type of files hosted on your site. Unless your website needs to hold massive amount of images & video your requirements should be covered under a standard shared hosting package. Appox 95% of websites use no more than 4GB of bandwidth a month.
If more is required, then look to upgrade to a VPS/Cloud package