Preallocation, or reservation, prevents any unexpected out-of-space condition on the file system by ensuring that a file's required space is associated with the file before data is written to the file.

What does Preallocating mean?

Filters. To set aside before a need arises for a purpose.

What does it mean when steam is Preallocating?

If there are any problems with your network, like server or modem issues, then we unable to process these tasks. So, Steam Stuck on Preallocating error might appear due to faulty internet connection. That's why check whether the internet is stable or not. If not, repair the issues and then start downloading the game.