that little script from the link is creating a new file based filesystem (of 3.6 GB = 900000 x 4KB), by creating an empty file with the right size and then converting it to a FAT filesystem.

It continues by mounting both old and new files and copying all files from the old file(filesystem) to the newly, smaller created one.

So it seems the old file/filesystem was initially created too big for the total size of the files it had to contain. No data is lost!

just for your info