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My game files are not compacted and why they match.
As for your situation would that not simply be Windows knowing the files are compressed and reporting so but Steam seeing the actual size as that is what is logged in Steam.
Size on disk means that the directory size is measured by the amount of clusters occupied x cluster size and is the real amount of storage occupied by the directory on the disk.
A usual NTFS partition has 4KB sized clusters and typically the more files are in a directory the more size difference between size on disk and actual size.
Steam identifies size and not size on disk, but for most games nowadays the difference is abysmal since the number of files is small and/or the size difference between these two is insignificant for today's available storage capacities.
just wanted to point that out , would cure my weird itch if they worded from "size on disk" to "size" instead. lol