Then I think you're probably right about it being a way to install the game offline.
Though update us if you need to use the second disc at some point.

I know that Series X has smaller capacity Blu-rays than PS5.

Yeah I believe its 50 GB for Series and 100GB for PS5.
But the filesize for PS5 (37GB) would fit on one Xbox disc as well.

The difficulty scaling is infuriating, I was wrecking everything so hard then I got stuck inside a large worm and I can't get out

PS5 uses triple layer blu-ray discs, so yeah, 100GB.

Didn't know the Xbox was still using double layer discs tho.

Also I remember there being talks of Sony having a great compression system called Kraken or something like that, but didn't know current titles were still so smaller than on Xbox.

I remember lists of comparison but usually were last gen and cross gen games because it was back when the consoles released, seems like that system is indeed quite good.

I'm playing on hard mode and I'm already have almost 40 hrs. Honestly, I'm still ok with the difficult. 

I'll give you a tip. Go and take at least lvl 15 with you, Hulkenberg and Strohl, so go to the desert and farm a bit (you can kill all centipedes without do a main fight). Oh, and make sure to evade the leader of the area (a enormous monster chicken).

Time to grind :)  Get some level ups.

This was the one nice thing about Mementos.

That's what I thought I should have been doing in the three days preparation but everything was dying in on hit so I thought I was good and then got locked into a timer inside that worm. I got out but by skipping enemies and going full Magla skills on the end boss with a healer healing every turn, it wasn't the difficulty but the evasion of the enemies that made that so difficult. 

As for leveling, what does one do? Just clear a room and wait for respawns? 

Is there a mementos equivalent? Kinda hard to level in this game when you get stuck on timers.