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A hard drive is a device inside the computer which stores information permanently.  When you save a file it saves on the hard drive.  When you install a file, it installs on the hard drive.  If you turn off and unplug your computer, then plug it back in and turn it back on and it's still there, it is on the hard drive.

You need a bigger hard drive when you are running out of space to install or store more things on your computer.  You cannot add to a hard drive.  If you need more space the hard drive must be replaced with a bigger one or a second hard drive could be added, but it would show up as a different drive letter in Windows and when you install things they would still go to the old one, not the new one.  This is because the main hard drive on the computer is the C drive and that is where things generally go.  If you were to add a second hard drive it would be a different drive letter, such as the E drive.  You would have to consciously save or install things there to make use of it.  If you need more hard drive space the easiest thing to do is to replace the C drive with a bigger one.