What a bizarre, mostly useless; yet absolutely neat utility. Of course, disk space is the immediate reason why it's so impractical.
I'm sure Apple has an ADB->USB dongle for $19.99 that you can use to connect a larger bit of storage. Actually, did these guys have SCSI ports on the back? SCSI->USB or SCSI->TB4 would be an fun cable.
It can emulate a floppy or hard drive. I tend to use a 2GB hard drive image which makes hacking on classic Mac a delight.