What does engine size actually mean?

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When people refer to engine sizes 1.1l, 1.2l etc what do these numbers actually mean? (I know its 1.1, 1.2... litres)

Is it how much petrol the engine holds in its pistons? How much petrol is runs through per minute while ticking over? The actual size of the engine should you melt it down?!

I've never thought about it until now.
 
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