I never played Gen 1 but I saw in an old question that you could have "20 free for all spaces" in your bag. Does this mean 20 different items, (Poke Ball, Great Ball, Potion, etc,) or 20 items in general, like if you had 20 Poke Balls.
In Generation I, the Bag is a list of up to 20 different kinds of items, with no separation into different pockets. The player cannot obtain new items if they do not have room in their Bag. The player can hold up to 99 of each item; if obtaining an item would result in the player having more than 99 of a single item, the excess items are placed in a new stack if the player has room for another item stack in their Bag (otherwise they cannot be obtained). (Some glitches, such as MissingNo.'s item duplication glitch, allow the player to hold up to 255 items in a single Bag slot.)
Despite the lack of pockets, there is still a distinction between Key Items and other items. Key Items have no quantity displayed next to them (since the player can only ever have one instance of each Key Item at a time) and cannot be sold or tossed.
It was 20 different items total, as there weren't pockets, but you could hold up to 99 of each item. The "items" are more like "stacks." There was also storage in your PC.
Source
Hope I helped!
