The alert you're seeing is referring to storage on your device.
Because Fresco uses the Photoshop file format, it has those same high memory requirements and requires a lot of runtime memory. Your iPad does not have enough memory to hold the drawing layers of most drawings in memory alone so Fresco writes them to temporary space on disk while editing a document only (it isn'tthe space needed to save the file, it’s the space needed to hold all the layers uncompressed in memory).
I don't know how much free space you have on your device but based on this alert you don't have enough for any document that might be opened in the app. Try freeing-up space on your device (by deleting unneeded text messages, photos, and apps) to get your free space up to about 3500 and the alert should disappear.