7.1.1 Release date revealed!

Is this the new system where we have 2 versions of the system on the phone, and updated will become more seemless, and just swap us over to the most current version when we re boot the phone?
No, that feature is only available on devices that shipped with Android 7.x (ex. Pixels, LG V20).

Not sure where the extra space on your device went though. Sorry.
 
It used to bother me until Google made the OTAs available on their developer site. Now I can sideload the updates if I get impatient, but usually I wait, just in case there actually are problems.