When you get the "Low Space Phone storage space is low" notification, and Play Store says "insufficient storage" when downloading apps, this refers to internal storage not the MicroSD card. Unfortunately without rooting the SD Card is meant to store pictures, music and movies. Some apps can be moved but still have parts which must remain in the internal storage. Rooting and creating an SD-EXT partition will give you as much 'internal' storage as the SD card holds thus bypassing such a limit on low capacity phones. Be aware however that rooting carries risks such as voiding your warranty