I’m encountering the same issue on my Jolla Tablet, it isn’t saying it needs to download 500MB, it’s saying the device needs 500MB free space after the 30MB update is downloaded, and prevents the user from installing it.
I even enlarged the root partition on my tablet with several GBs a couple of years ago specifically because the “not enough space on root partition” problem kept showing up with every new release.
Edit: ah, wait a minute, perhaps the enlarged root partition got undone after performing a factory reset.
Edit 2: it did indeed get undone after a factory reset. Here’s a great guide to enlarging the root partition. @ninepine, if you follow this guide, you’ll be able to fix the problem.
Edit 3: well, apparently, by following the guide, my device lock code got changed, and now I can’t do anything with my tablet anymore. Great.