iOS, itself, needs a certain minimum of free data storage space to function properly/nominally.
Typically more than 2 GBs and I advise maintaining between 3-4 GBs of free storage space, at all times.
Your iPod simply did not have enough avalable free data storage space to copy data to its buffer, then to the device because your iPod Touch didn't have enough free data storage space to hold onto the data, while transferring, AND to keep iOS running.
You never, EVER want to completely fill up a mobile computing device OR computer with data.
The operating systems of these computing devices need a certain amount a data space available to the OS for it to operate normally and optimally.