Advertised disk space vs actual disk space

Why is it that advertised disk space is almost always higher than the disk space reported by the UI? For example, I have an "80 gb" hard drive, but the iTunes UI indicates only 74. I usually see this as well with hard disks and the amount reported with the drive letter.

There are 3 reasons why the amount of space you can actually use is different from that listed for the drive, all of which work against you:

1. Hard drive manufacturers treat 1GB as one billion bytes, while the operating system calls it 1,073,741,824 bytes (1000 * 1000 * 1000 vs 1024 * 1024 * 1024).
2. You lose some space for file tables when formatting.
3. Disk space is divided into chunks (blocks) larger than 1 byte (typically 4K). Using typical Windows defaults, even just a 1 byte file still uses 4K of space on disk. A 4097 byte file uses 8K.

Of these, the first two can influence the amount of space reported by the drive (though IIRC the 2nd one was more of an issue with FAT32 than NTFS). The last one only influences the amount of free space remaining, but will still prevent you from using the full capacity of your drive.