Not all executables may be necessarily resident on the system. You can have administrative tools like an editor or some additional kernel modules only required for administration on the remote site and simply upload them on demand, removing them when the tasks have completed. This is performance-critical since, as noted above, the file system resides in buffer cache. Alternatively, you can have modules with nfs support on the embedded system, which can temporarily increase disk space availability tremendously. You can even swap via nfs, but this is not suitable via a modem-line! Of course, nfs has security implications that need to be considered if running such a system outside a secure network.
The point of all this is that there are very few resources really needed on-site. Much can be moved off-site as long as there are mechanisms available to hook them up on demand (via scripts, cron etc.).