To record more data in the same size package requires chiefly, higher bit density. More bits per track, and more tracks per inch. Perpendicular recording allows the bits to take up much less space (probably 10% of the space required for previous methods). But advances in micro-mechanics, microelectronics, magnetics, and signal processing are chiefly responsible for the current day bit and track densities.
The first hard drive I owned (circa late 1970's) had a capacity of a whopping 5MB (yes Megabytes). I believe the specs were: 2 platters - 2 sides (4 surfaces), 300 tracks per surface, 17 sectors per track, 256 bytes per sector (4 * 300 * 17 * 256 = 5,222,400 Bytes).
That's about 120 tracks per inch. Compare that to present day 236,000 tracks per inch and you can see where the increased capacity comes from.
It was a full size 5.25 inch form factor "bare" (internal) drive ... The same width and height as a stack of 2 typical present day internal DVD drives, with a length (depth) of about 30% longer (slightly smaller than 6 x 3.5 x 10 inches). It weighed about what a full size HD-Video laptop weighs today.
At the time, it was pre-production, for developmental use. Definitely state-of-the-art at the time. It was manufactured by Shugart Associates, and was packaged inside a full-size Samsonite briefcase. Complete with cables, documentation, and SASI host adapter circuit board (SASI was predecessor to SCSI). The case had a "foam rubber" insert with 2 "cutouts", 1 for the drive and 1 for everything else (the SASI host adapter circuit board was about 8 x 10 inches).
The whole kit was marketed as "Shugart's Case for Success". I don't remember how much it cost, but I'm sure it was probably at least $1000.00 or perhaps $1000.00's. I don't remember how much it cost because it didn't cost me anything... I won it as a "door prize" at a seminar that was hosted by a Shugart distributor. It is the only thing of any significance I have ever won. Pretty sad (5MB hard drive) by today's standards.