Reason why i ask is becuz i only have 100mb of free space but the one reserved for software & apps has about 1.8 GB left.
Yes, games download as an "app". If the game takes memory of the 100MB (rootfs I assume) or the 1.8GB (/opt) depends on whether or not it is "optified". All games that are in Extras (not guranteed for Extras-Devel and Extras-Testing) must be optified (because otherwise the Extras QA people did something wrong).
So the answer is: Yes, games in Extras download as "apps", and take most of their space from the 1.8 GB (/opt), and only a few kb of the 100 MB (rootfs) - that's needed for the application entry and icon at least.
AFAIK all apps and games in Ovi Store must also be optified.