It is 1gb but as with any hard drive/solid state drive, it needs to be formatted (be it as fat16, fat32, exfat, ext3, ext4 ntfs etc) So that the drive has a file allocation table & master boot record.
Add to this that of the 16gb or 32gb only 11gb or 28gb(ish) is available respectively after formatting and then the operating system needs to be installed somewhere, presumably part of the 16 or 32gb is partitioned off to be used for that as I believe a formated 16gb drive should get you about 14gb usable space, so in theory, the 16gb could be hosting the lot.
16gb formatted, leaving 14 odd, with 1gb partitioned off for Ram, (formatted giving you the 780mb and 1.5gb ish partitioned off for the os, leaving 11gb odd for all your other downloads and apps.
It would at least be a very cost effective way to organise things. Rather than have three separate chips hard wired onto the main board, and also saving valuable soldering space.