ota

ERROR Error binary size: Error: ESP does not have enough space to store OTA file. Please try flashing a minimal firmware (remove everything except ota)

It is great chance that ESP8266 is equipped with 1M flash. So change board definition in yaml from

board: esp01
# or
board: esp8285

to

board: esp01_1m

or for 4M to

board: d1_mini

esphome:
  ...
wifi:
  ...
esp8266:
  board: ...
ota:      

debug:

sensor:
- platform: template
  name: Flash Real Size
  lambda: |-
    return ESP.getFlashChipRealSize();
  update_interval: 10s