Agree - OP even links to this[1] PC gamer article which calls out Hitman 3 as having a much smaller size compared to Hitman 2 (and Hitman 3 includes all of Hitman 2). How did they do it? Compression[2].
There was more to it than just compression. Hitman 2 allowed the player to install/uninstall each level individually, and the way that was implemented meant that each level had its own copy of every asset it contained. Hitman 3 removed that option and simply shipped every level in one unified package, with assets used in multiple levels only stored once.
Hitman 2 had 6-8? locations. They could have pretty easily packed the assets into a hundred files based on use and made each level install a different subset.
[1] https://www.pcgamer.com/biggest-game-install-sizes/
[2] https://www.pcgamer.com/how-hitman-3s-devs-shrank-the-entire...