I prefer separating.
On Windows 2000 and newer (until Win 10/11) I separate my datas from operating system and applications on a separate partition. This has mainly three reasons:
1. If I occupy fully my syste partition, WIndows is no more able to write files, also writing system files is impossible. So Windows will fail. So if I put my photos, movies, documents, spreadsheets, etc. on a separate partition this never can happen.
2. In the past I sometimes had the experience that Windows crashes, and in some rare and hard cases the crash also destroys the Windows partiton. If my datas are there, they also get lost. Hopely I have backup, but one time in times of 2000 or XP, I lost everything. Since then, separate partition or better other harddisk to store my files, and make backup from time to time (robocopy is my friend since several years)
3. A good side effect of having a separate harddisk is that if my computer or system disk gets broken, I only have to put the harddisk in another PC or install Windows to a new harddisk, and I can access my data. (sometimes I need to takeown, icacls that data disk to be able to access it again)
On FAT file system based operating systems, MS-DOS and Atari TOS, the bigger the partitions are, the bigger is one cluster. A cluster is a group of sectors, and the bigger the partition is, one cluster has more sectors. And one cluster is the smallest unit which a file can occupy. So if I have big partition with lets say 32 kB clusters and I put many 1 kB files on it, then every file wastes 31 kB of disk space. This is not effective. Additionally as above, if DOS or TOS crashes, maybe it destroys the file system and I loose everything. Usually I separate by topic, operating system, patches and enhancements, system utilities, commands and Windows (on MS-DOS machines) on C:, applications, games, on D:, E: ... and data on the last drive. Usually I separate the kind of applications and games on different partitions. The most extreme installation of this kind is my Atari Falcon 030 with a 32 GB compact flash card, it has 16x 1 GB partitions to separate system tools, office applications, games, demos, music files, pictures, ... and additionally one 16 GB ext2 partition for the MiNT OS with it*s applications (here I didn't separate because when installing that I had no experience to see how big the partions must be).