Adjusting the disk space allocated for System Restore affects the number of restore points that can be stored. Increasing the allocation allows more points to be saved, providing a wider range of restoration options over time. However, it also means that more of your disk space will be used for these points, which might be a consideration if you have limited storage. Decreasing the allocation saves disk space but reduces the number of restore points that can be kept, potentially limiting your options for system recovery.