Will my HEX file fit in my microcontroller?
The hex file generated is often somewhat human-readable and includes checksum data, both of which inflate the size a few times.  I believe that AVRs use the Intel HEX format, while other micro toolchains use other formats; e.g. Codewarrior for Freescale HCS08 provides Motorola S-records, which is extremely similar.

If you open the .hex file with a text editor (Notepad), it should look similar to this, though much longer:

:10010000214601360121470136007EFE09D2190140
:100110002146017EB7C20001FF5F16002148011988


where the various fields are described in the example on Wikipedia.  There are only 16 bytes in each of those lines that denote data that will be stored in the micro, the rest is checksum and control data that is just used by the flasher program.