The N900 has two (or three if you have a memory card installed) separate flash memory areas. The first is a 256M high-speed flash which is attached directly to the processor. The second is a 32GB built-in flash.

The root (or rootfs) is so-called because it's at the root of the directory tree (the lowest level). This is on the 256M high-speed memory, because it contains the libraries and applications that are used most often. The /home and the /home/MyDocs directories are on the 32GB internal memory - /opt is actually just a link to /home/opt.

The reason the root memory is only 256M is because that was the largest available at the time the phone was designed.

You can see what free space you have where by running X Terminal and typing: