Your files live in your company's own file storage, partitioned company by company: another company's files are as invisible to you as their books are, and yours to them.
What the storage meter counts is every file your company stores: record attachments, library files, captures waiting in the inbox, the PDFs your prints file for themselves, year-end bundles — including files sitting in the trash, which occupy the store until they are purged (§14.8). The small preview thumbnails the library shows (§14.4) are stored files too, and they count like any other — they are part of the paper, not a hidden extra. What it never counts is the business itself: your records and transactions — every invoice line, every journal — live in the database, and the database is not metered at all.
That split is deliberate, and it is why the section is titled as it is. Files are the one thing that grows without a natural limit and costs real storage to keep; the ledger is the product's substance, not its overhead. So the plan meters the paper, not the business.
The total is refreshed daily and shown on the Subscription tab (15.2). At your plan's storage limit, a new upload is refused with a message naming the limit and the plan — nothing is half-saved. The cures are §14.8's: purge the trash, export what must be kept elsewhere, or move to a plan with more room (15.3).