There is the area where data is written, and there is the File Allocation Table that keeps track of where files are placed.
When part of a file needs to be overwritten (either because it inserted or there is new data) the data is really written to a new area and the old data is left as is. The File Allocation Table is updated to point to the new area.
Eventually, as the disk gets used, that new area eventually comes back to a space that was previously written to, but is not being used. And that data gets physically overwritten.
Each time a spot is physically overwritten, it very very slightly degrades.
With a larger disk, it takes longer to come back to a spot that has already been written to.
Oversimplifying, previously written data that is no longer part of a file is effectively lost, in the way that shredding a paper effectively loses whatever is written, and in a more secure way than as happens in a spinning disk.