Possibly because the version stored on disk is heavily compressed (the keyword squashfs comes to mind), and its expanded to its full form when its in memory?

besides uncompressing itself, there will be other info that is needed at runtime that requires dynamic memory allocation beyond the size of the kernel itself, like hardware/memory maps, framebuffers, filesystem/networking stuff, caches etc.

Same, and made it easier to read when flipping through them.

Not in my house...