Eclipse is a pretty feature packed (and perhaps bloated) IDE, but its still pretty useful. However, it does do some stupid things like storing 900mb worth of crap from yesteryear.
In your Eclipse workspace folder, there is a ".metatags" directory that stores all project related information.
Every time you modify a file in Eclipse, a copy of the old contents is kept in the local history.
By default, it keeps up to 50 copies of each file (that is under 1mb) for 7 days. For some reason, my Eclipse wasn't always clearing out the files upon exit either.
If you have a large file intensive project, that's a helluva lot of files! This isn't exactly a bad feature, especially if you don't use version control of some sort, but if you do, its useless.
Under ".metadata\.plugins\org.eclipse.core.resources\.history", you'll be able to find the local history of all edited files. Delete all them. Don't worry, its ok!
Open up your Eclipse preferences dialog and change the following:
I changed mine to 1 day, 1 entry per file and 1mb limit (since I couldn't set anything lower). You may want to change it to something more suitable for your usage.
Remember to restart Eclipse to apply the settings. Your Eclipse should now purge files whenever it is closed, but it still seems to need cleaning once in a while as files are deleted but cache directories aren't.
There are more uncommon space saving tips here.