There are typically 4-6 million variants discovered through this method of genome sequencing in a normal genome. A simple variant consists of a genome coordinate at ~32 bits (one of 3.2e9), and the change from the reference, which is a x,y index into {A, C, G, T}^2, at ~4 bits. Typically the coordinates are spaced on average ~1k bases apart, so the coordinate could probably be squeezed into ~15bits with clever encoding. So a naive encoding of this information gets to 27MB, and that could probably be shoved down into 10MB if coordinates are deltas from the previous, rather than absolute. 1MB seems feasible, but with diminishing returns computationally.
Pretty much all genomic data uses a reference genome as the basis. This is versioned, and has a bug tracker, etc., for various regions that have been difficult to assemble.
The flow is:
1. BCL (scans of the glass slide) 2. FASTQ (individual short reads and quality scores, unsorted and in random order) 3. BAM (individual short reads aligned to the reference genome) 4. VCF (the "diff" vs. the reference genome)
All of this can be done with <10GB of reference data and code, where the reference data is the current human genome, a burrows-wheeler transform of the human genome, gene locations, and dbSNP (the database of common human variation).