The soul is such an interesting concept. To many it doesn't exist, to others it is something that only matters once we die and set to depart from this world. Both are true, and yet neither of them are.
The soul doesn't exist in a physical manner, strictly speaking and thus the first group is correct. Yet, when we die it has been proven by several scientists, in many worlds, across a multitude of universes and multiverses, that the body will lose a measurable amount of weight at the exact moment of death. Thus, the second group is also correct. Quite the paradox, the soul is, hmm?
In truth, the soul is so much more than just some weight we lose, or a phrase that specifies something that doesn't exist. The soul is the space in which your sense of self is stored. Every key memory, every decision made and every facet of your true self is stored here. However, this space is not infinite. It is not an immeasurable expanse that contains all of your existence. There is a limit, and as you reach it then you will forget things. You will forget memories of little to no importance, "What time did I say we were getting food?" and other little things like that. However the closer you get to the limit, the more major these lost aspects become, "what's my wife's name again?" or even forgetting who your family is entirely. Severe cases of this is sometimes referred to as Dementia.
When you experience the event that will become your first waking memory, that is the first thing stored within. From that point on, as your personality and sense of self develops, it will determine what is stored. What memories will be burned into your mind for ease of recollection. What emotions will you exhibit more strongly than others. Your likes and dislikes. Your Life's Dream.
Under normal circumstances, despite the finite amount of space inside each soul. One should have all the space they could ever need to be a perfectly normal person, and only approach the storage limit as they enter their later years. For those who utilize Chakra, the combination of spiritual and physical energies, this limit is naturally higher. Due mostly to them unintentionally training their spirit, or soul, to have an increased capacity as they utilize and train their Chakra.
For the Naruto Uzumaki of this universe, however, he was shit out of luck.
When a Biju is sealed within someone, it creates a seal space that connects to the soul of the host. The Biju resides in this seal space and as their chakra is filtered, it makes its way into the soul space of the host and then into the host body. The important part here is that the Biju does not reside in the soul itself, their own space is merely connected to it. As such, they take up no space inside the soul.
But when the Kyuubi entered little Naruto, there was no such seal space to house him. And as the Kyuubi required access to little Naruto's Chakra to sustain himself in a manner akin to using life support, he needed somewhere with a direct link to Naruto himself. There is no room within the physical body, too many pesky organs. So the Kyuubi made himself at home in the only place left that fit his needs. Naruto's Soul. And with that single action, 80% of Naruto's Soul space was already filled before his first memory was recorded.
