That message is talking about your hard drive. If you select the hard drive and then go to the File menu and select Get Info it will tell you how much space is available on it. Most experts recommend having at least 15% of your disk free for best performance.
If it is full you may want to do a few things to free up space on your hard drive. First thing I would try would be to empty your Trash. Lots of people put items in the Trash but forget to empty it, a necessary step to reclaim the hard drive space taken up by those items.
If you have large music, video and photo libraries, you might also want to consider moving them to an external hard drive. Use this Apple article to move the iTunes library to an external hard drive.
This article does the same thing for the iPhoto library.
Best of luck.
You need to free up lots of hard drive space.
At a minimum, at least, 15 to 20 GBs of space.
Perhaps even more.
Hard drive full or near full:
You are going to have to delete, move or archive your data to regain hard drive space.
Have you emptied your iMac's Trash icon in the Dock?
If you use iPhoto, iPhoto has its own trash that needs to be emptied, also.
If you use Apple Mail app, Apple Mail also has its own trash area that needs to be emptied, too!
Other things you can do to gain space.
Delete any old or no longer needed emails and/or archive older emails you want to save.
Look through your Documents folder and delete any type of old useless type files like "Read Me" type files.
Again, archive or delete any old documents you no longer use or immediately need.
Uninstall apps that you no longer use. If the app has a dedicated uninstaller, use it to completely uninstall the app. If the app has no uninstaller, then just drag it to the OS X Trash icon and empty the Trash.
Download an app called OnyX for your version of OS X.
When you install and launch it, let it do its thing initially, then go to the cleaning and maintenance tabs and run all of the processes in the tabs. Let OnyX clean out all web browser cache files, web browser histories, system cache files, delete old error log files.
Typically, iTunes and iPhoto libraries are the biggest users of HD space.
If you have any other large folders of personal data or projects, these should be moved, also, to the external hard drive and then either archived to disc and/or deleted off your internal hard drive.
You may have to Purchase an external FireWire or Thunderbolt hard drive to move these files/data off of your internal drive to the external hard drive and deleted off of the internal hard drive.