I think this is an anaconda bug. My first GUESS at the nature of the bug is that it includes the space that a swap partition would have used in computing whether the destination is large enough, even though it isn’t actually creating a swap partition. But if that guess is garbage, I still think there is a bug.
Using the Fedora 35 kde spin, I installed from usb to usb. I want a normal, not “live” install on a usb stick. Having previously installed from the same source, I knew under 4GB would be used, so I thought an 8GB stick should work. I tried on two different computers but both had 32GB of ram and I think that might be relevant. I don’t have a 16GB stick easily available for testing and it later worked with a 32GB stick.
With an 8GB target, with auto partitioning, it failed with an error message that the destination was not large enough and that message breaks out the required size as the sum of a modest overestimate of the actual software to be installed plus a giant swap partition. That makes no sense because it doesn’t actually want to create a swap partition. The exact size of the swap partition it claimed to want was quite different between the two computers, despite both having 32GB of ram. But roughly it was 15GB (so if my guess at the nature of the bug is right, a 16GB stick won’t work with 32GB ram).
Based on a Reddit thread on the same problem, I tried manual partitioning. That changed the error message to no longer mention swap. In multiple tests of that, I got a few different failures, but all indicated the target was too small in some way.
When I finally got it to work (with a 32GB usb target and auto partitioning) the total size of the used portion of the main partition plus the entire (used plus unused) size of the two small partitions added up to under 4GB, so even with the over estimate reported by the first error message, there was plenty of room in an 8GB target.