That means the Docker daemon we’re using to build is out of space, which could be either local or remote.
You will see messaging about using remote builder fly-builder-<name> in the logs if it’s using our remote builder. The simplest thing to do is fly apps delete -a fly-builder-<name>, which will start you with a fresh disk. This is something we’ll automate soon, I’m sorry you’re running into it!
If it’s not using a remote builder, you will likely need to run something like docker system prune --volumes to clean up the Docker junk that’s left around.