Does MSFS delete old files and clean up after updating?
I have a 250GB drive dedicated to MSFS only and it is getting uncomfortably full. When I bought it I thought that 250GB would be ample capacity, but it now looks like I may have to scrap it and install a bigger drive.
Currently my MSFS drive is reporting 68GB free and recent updates appear to be filling it more rapidly.
I would strongly recommend a larger drive, especially if you’re installing all the World Updates and a bunch of custom scenery and planes. 
Yes I’d say you need at least a 1tb drive to allow the ever increasing size of Msfs room to breathe in the future.
I had a 240gb SSD originally for Msfs and had to buy a 1tb nvme to reinstall it on. At the moment I also use it not just for the sim but also all my community add ons. I dare say it’s getting very full, very quickly and will probably have to buy another possibly 2tb drive this time just for the add ons alone and leave the 1tb just for the sim.
My FS folder is currently 365 Gb in size. That does include dlc. It’s installed on a 2Tb SSD though.
With all my addons, I am close to filling up a 1 TB drive and have needed to delete a few things. I will soon need to clone it onto a 2 TB drive.
Just wait a few months 
I have an NVMe 1TB drive dedicated for my flight sims and it is getting uncomfortably full.
But 2TB NVMe drives are still too expensive, especially when buying a very fast one like Corsair MP600 or similar stuff.
What to do what to do… the Community folder must still be on the same drive where the flight sim is installed otherwise all storage problems would be gone.
You can put them where you like with MSFS Addons Linker for Microsoft Flight Simulator | MSFS. As an added bonus, it gets really easy to enable/disable add-ons and you can freely organize them into folders. Highly recommended when using a lot of different add-ons.
Thanks to everyone who has replied, no doubt I’ll need to raid the piggy bank and buy a bigger drive.