Does a Failed Transaction Still Occupy Block Space?
Yes, a failed (reverted) transaction still occupies block space. The transaction itself, along with the proof of its execution and failure, is included in a block to ensure that the failure is recorded on the immutable ledger.
This consumption of block space is why the transaction fee is still paid.
Glossar
Block Space
Capacity ⎊ Block space, within cryptocurrency networks, fundamentally represents the finite data storage available on a blockchain to accommodate transaction records and smart contract execution.
Transaction Fee
Fee ⎊ A transaction fee, across cryptocurrency exchanges, options markets, and financial derivatives platforms, represents a charge levied by an intermediary for facilitating a trade or transfer.