Leaving to one side these doubtless interesting discussions of the definitions of different types of storage space, it's worth noting that PDF complexity is not just related to the size of images. A PDF page is rendered by executing drawing instructions stored in the PostScript language, and if a page contains complex diagrams, for example, these instructions can require more memory to execute than the Kindle has available. This can lead to the "out of memory" error that the OP saw.
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