Create workspace at capacity level

Hi,

I am attempting to create a workspace (on premium) accessible by all employees in my org. 

To my understanding, I am required to select the License Mode - Premum Per Capacity

Currently I am unable to select this. Could someone tell me what the requirement in order to this is?

I currently have a pro and a PPU license assigned to my account.

Also, Could someone tell me the difference between the small dataset storage format vs the large one?