Why is / subdivided? I need that space.
 

I installed barebones squeeze onto a single partition of a 4gig usb drive. In df -h I see 4 "partitions":

Filesystem Size Used Avail Use% Mounted on
/dev/sdb2 985M 984M 0 100% /
tmpfs 1013M 0 1013M 0% /lib/init/rw
udev 1008M 176K 1008M 1% /dev
tmpfs 1013M 0 1013M 0% /dev/shm

Obviously I've run out of space, yet I'm not utilizing 3/4 of the disk space because of these "soft partitions(?)".
Where is this configured? Can I fix it on the system or do I fix it by configuring it differently on a fresh install somehow?

Tmpfs is a virtual filesystem, it only exist in RAM. Consider slimming down your install by removing unwanted packages, especially Gnome/KDE have enormous dependency chains that needlessly clog up sparse storage. Alternatively, consider a bigger USB drive.. ;)

985mb indicates you are not using the entire 4gb. recommended bare minimum is 1gb no desktop/5gb desktop (and 8/16gb usb drives are cheap so why not have more)

post your partition scheme with

A single 1GB partition is not really enough, a minimal Debian install is CLI only without xorg or the "standard system".