This question about zip bombs naturally led me to the Wikipedia page on the topic. The article mentions an example of a 45.1 kb zip file that decompresses to 1.3 exabytes.>
This is easily done under Linux using the following command:
dd if=/dev/zero bs=1024 count=10000 | zip zipbomb.zip -
Replace count with the number of KB you want to compress. The example above creates a 10MiB zip bomb (not much of a bomb at all, but it shows the process).
You DO NOT need hard disk space to store all the uncompressed data.