iCloud backup is much larger than phone memory

My daughter has bought a new iPhone, and when we tried to transfer, it had some problems with size. So I upgraded her 5GB backup plan to 2TB. That solved the problem of backing up, because iCloud claims to have backed up 512.2GB from her 64GB iPhone. How is this possible, and what can be done to fix it? It also becomes a bit hard to download this half TB into her new 64GB iPhone, in effect sabotaging the entire transfer old phone --> new phone.