@inkyfountain can you share a link to the game in question? Here’s a GIF showing how to do that:

I’ll be able to give more info once I’ve seen the code, but the most common culprit in “file too large” errors is having too many full screen images. Does your game have an animation that’s the size of the entire screen? Every screen is approximately 10 kb so it can end up filling up the meowbit’s available code space pretty quickly.
As for why the PNG is only 72 kb, we compress the source code when we embed it into the image. MakeCode programs typically compress very well, so even programs that are actually very large when compiled can end up being much smaller when downloaded. We don’t compress the code when sending it to the actual device.