It was the same deal with some Windows Mobile 2003 (and presumably other) devices. Except it was Windows, so of course it had to have a weird interface. There was a slider in the control panel that let you change the allocation of RAM between "memory" and "storage". But the system would auto-adjust this allocation, so the slider's effect was temporary. It was quite strange.
I remember you could somewhere (Regular settings? Or perhaps some hidden registry-tweak?) turn off the automatic memory allocation, so I moved as much software and documents as possible to the internal flash storage (still relatively tiny) respectively an external memory card and then moved the slider fully over to the left in order to have as much program memory as possible.
See the first screenshot on this page:
https://www.pocketpcfaq.com/faqs/5.0/memory_management.htm