The usual approach is to plug in a USB drive, however this model has no USB port, so you are limited to the small internal chip. You might gain a couple of MB by using owut or the Firmware Selector to cram down your installed packages into the ROM (which is compressed more efficiently) instead of jffs.
Temp storage is a RAM disk. Files there are erased in a power cut or reboot.
Temp storage is ram disk. You can install packages there until reboot by using -d ram parameter to opkg and adding lib path and program path.
You can use luci-app-attendedsysupgrade for more comfortable selector frontend.