Adjacency List - Efficiency

The memory usage of an Adjacency List depends on the number of edges, not nodes. Space complexity: $O(V + E)$.

Even if $V = 100000$, if $E = 200000$, you only store about $200000$ entries total (accounting for both directions in undirected graphs). Compare this to the matrix approach which would need $10^{10}$ cells. For sparse graphs where $E$ is much smaller than $V^2$, adjacency lists are the clear winner. This is why they are the default choice in competitive programming.