system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How do save game files for large open-world games work? How is the game told exactly where everything is, who is where, etc in such a relatively small file?
gpt
The amount of data required to save "everything" that is known about the save file is quite small. The locations of NPCs and usable entities are only saved if they are important for a quest or they are in the area of the map which is loaded by the player. Everything else is just ignored because the game will respawn these NPCs/entities when the player loads that part of the map. If they are dead, they are recorded as dead in the save file so are not respawned.

All the items the player ever has also take up very little space, they are essentially 8 digit codes, or similar simple pointers, that tell the game what item it is. Only items that were interacted by the player are saved, so if you pickpocketed someone, the save file records this and won't spawn that NPC with the item you stole, otherwise the game assumes it's default.

For many open world games, especially Bethesda ones, the save file gets bigger the longer you play, since you interact with more and more things that need to be recorded. However the map is also very frequently reset. Shopkeepers get new inventory, dead bodies disappear, items respawn to their default positions so that the information can be removed from the save file. 

So TL;DR
Everything in an open world game can be explained with XYZ co-ords and simple digits that explain the state of all objects the player has interacted with, saved in some kind of array or other storage system. This is just text, text takes up very little space.