I used to run Waydroid directly on the phone, but the phone has terrible specs and Waydroid had become frustrating in the last few months, when it updated its LineageOS image to a new Android version. It would frequently crash or pop up an infinite series of "app is not responding" dialog boxes, even though whatever app it was was responding just fine. With my new VM + waypipe setup, Waydroid launches in ~10s instead of ~3 minutes, and everything is reasonably snappy despite now traveling over the network, so I'm happy.
I can't even fathom what the build system is doing in order to require this amount of storage.
A large number of 17 year old repositories, prebuilt toolchains, and the fact that you otherwise have every little bit of source code, intermediary results, and output to create a full operating system all in the same place.
As for the memory, the very first step (that basically already is the benchmark for the most memory usage) is loading the entire build tree and generating build steps. Yes, that takes 32GB of RAM, if not 64GB nowadays.
That being said buying a phone compatible with Lineage or Graphene (only Pixels for the latter) is well worth it. This will probably become even more important in the future if Google bans sideloading or complies with idiotic laws such client-side scanning of messages in some markets.