The SD card image doesn't know that you use a 16 GB SD card, so it has been built with a smaller SD card in mind.
You have to remove the rootfs partition from the SD card and re-create a new one which starts at the same position and spans the whole SD card. You do that with the "fdisk" program. Then you need to run the "resizefs" program to enlarge the file system to use the whole partition. Both steps can be done on the Parallella itself.
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