Someone will come on and correct me if I am wrong, (and I am going to skip a bunch of the finer details,) but the OS is created in a separate 'partition' of the internal storage, and the remaining space is left in its own partition. Settings->Storage reports the space in the non-OS partition. Again, I too wish I could see the OS partition in these numbers.
More importantly, I wish manufacturers would report actual available storage on the packaging of a device, it is such a kick in the pants to get home with your brand new device and find that you have only half the space it says on the box. Very frustrating.
Hope this helps.