Why does a short video recorded on the iPhone have almost the same file size as a full HD movie? Videos recorded on the iPhone are huge. I don't know where I'm supposed to store those videos. Even with 1TB of storage, I'd run out of space if I regularly recorded &amp; stored these huge files. Also, they're cumbersome to transfer and stream.

Why are they so big anyway, and is there anything that can be done about that?
The answer boils down to how much work the compression algorithm can do to squeeze the file down, and how much quality loss you are willing to tolerate.

Dark Knight on Blu-ray uses VC-1 encoding at 24Mbps, and it's around 27GB on disk. Good thing BDs have so much room! The goal is to give really good quality.

The iPhone encodes things around 17Mbps (according to the file I just checked) using h.264 with the High@L4.1 profile. It has to encode things in real-time because it can't stream the raw video to flash. Doing things in real-time limits the amount of work the compressor can do and results in higher file size than slower compression. The iPhone could probably choose to degrade the quality of the video in order to get smaller files, but since you can never get quality back, it makes sense to keep quality there at the beginning.

The BD rips you're talking about have two things in their favor.  One is that people are willing to accept a much lower quality than the BD in order to shrink the file size. Also, they have plenty of time to compress the files, so they can easily compress at half or quarter real time.  That lets the compression algorithms find a lot more ways to shrink the file size without degrading quality.

If you want to store the iPhone videos yourself for later viewing, you can certainly transcode them yourself and shrink them. You probably would not want to use the results for a television ad but they would be perfectly good for keeping memories.