Versioning update to Document Libraries in team sites in SharePoint Online and OneDrive for Business

Technically you are correct (and I should probably amend my posting to reflect the following) - Shredding and differentials were introduced in SP2013. It is enabled in the database. SPO shows and provides full details as though item in the versioning and history is complete item - hence storage reporting in version history and on site-dashboard reflects equiv. of full copies retained.

Unfortunately your storage quota reflects this usage too *not* actual data-storage (I did some checking on last year to be sure of what is saved vs what is shown).  What is happening is a disconnect in representation *and* behaviour of the apps dealing withe the documents :(

..I'd already written a large entry - I didnt want to muddy waters with long detailed waffle on actual vs registered on reporting.