The disk space can be used in a boot loader is very restricted because a MBR (see MBR) is only 512 bytes but it also contains a partition table (see Partition table) and a BPB. So the question is how to make a boot loader code enough small to be fit in a MBR.
However, GRUB is a very large program, so we break GRUB into 2 (or 3) distinct components, Stage 1 and Stage 2 (and optionally Stage 1.5). See Memory map, for more information.
We embed Stage 1 in a MBR or in the boot sector of a partition, and place Stage 2 in a filesystem. The optional Stage 1.5 can be installed in a filesystem, in the boot loader area in a FFS or a ReiserFS, and in the sectors right after a MBR, because Stage 1.5 is enough small and the sectors right after a MBR is normally an unused region. The size of this region is the number of sectors per head minus 1.
Thus, all Stage1 must do is just load Stage2 or Stage1.5. But even if Stage 1 needs not to support the user interface or the filesystem interface, it is impossible to make Stage 1 less than 400 bytes, because GRUB should support both the CHS mode and the LBA mode (see Low-level disk I/O).
The solution used by GRUB is that Stage 1 loads only the first sector of Stage 2 (or Stage 1.5) and Stage 2 itself loads the rest. The flow of Stage 1 is:
The flow of Stage 2 (and Stage 1.5) is:
Note that Stage 2 (or Stage 1.5) does not probe the geometry or the accessing mode of the loading drive, since Stage 1 has already probed them.