Updating from iOS 6 to 8 I currently have a 16 GB iPhone 5, with about 1.2 GB available storage. It's still on iOS 6 (I know, right?!) and I figured it's about time to update. Under software update, it says iOS 8.4 is 1.2 GB.   

Does that mean the entire update will need just that much space, or will I need more than that considering I don't have iOS 7 and that it's a big jump from the iOS 6 interface to the iOS 8?
It may need more than the space of the update to move things around while updating, but if that is the case, it will refuse to update until you free the space needed.
In that situation, according to this Apple Support document, you could:


Plug your device into your computer and update using iTunes.
Manually remove content from your device and try to update again.