The 8 GB is referring to the ram, which is the memory for processing. 8 GB of ram is a pretty good amount of ram to start with. The hard drive is 1 TB. Most games are around 40 to 50 GB. There are approximately 1,024 GB in 1 TB. If you use the rough figure of every game being 50 GB, the current 1 TB hard should be able to hold about 20.48 games. It will hold more because like it said most well known games come in about 40-50 GB.
You can install additional hard drive and you can use an external hard drive if you choose to for additional storage. My son is using an external 3.0 USB and has no issues. He does this with plenty of space on his internal HDD.