How can the size on disk be smaller than size?
This would happen if you use NTFS compression to compress the file.
You are correct that the size on disk is normally larger. However, sometimes, due to built in compression, the file is actually smaller on the disk.
Source
A file can also appear to be smaller on disk if the file is a sparse file. In that scenario, file size refers to the logical size of the file, whereas size on disk refers to the physical size of the sparse file.