Can't update to iOS 18 "Device Storage Full" but there is space

It is not a problem for Apple to fix so much as it is a problem where when you purchased your device you chose a capacity that was not suitable for your needs or without considering future storage needs. You should always try to get more space then you think you may need if you can afford to or be prepared to have to do storage management. iCloud storage does not give your device additional storage capacity. You need to clear space on your device so that there is enough storage available. You can also try updating via Mac or Windows PC

What's the difference between device storage and iCloud storage? - Apple Support

Per this Apple article:

Update your iPhone or iPad - Apple Support

if you get the "full" warning, tapping "Continue" will delete apps to make room, but they will be automatically reinstalled after the update is complete:

You are confusing "space" in iCloud with space on your phone. Please spend a few minutes to read through this Apple Support Document:

What's the difference between device storage and iCloud storage? - Apple Support

Space in iCloud has nothing to do with the available space on your phone.

So, not only are you being told that there is not room on your iPhone with a straight face, it is also a very honest face.

Next time, buy a phone with as much capacity as you can.