"Due to its history (fork of ipkg), opkg can specify a destination different than root for package installation, but since most packages don't support this natively, it's more a curiosity than actually useful."
" The recommended way to have more space to install your packages is Extroot"
Since SquashFS is a read only filesystem, it doesn't need to align the data, allowing it to pack the files tighter thus taking up significantly less space than JFFS2 (20-30% savings over a JFFS2 filesystem)!
BTW, thank you for engaging with me and pointing me in the right direction, this is a massive learning experience and I've come to appreciate openwrt's documentation and learned a ton, just because I don't want to throw away an old router with 16mb.