You can occupy the same space as a creature in combat ONLY by grappling it (be it friend or foe).
In the above example with the large creature the grappled 5x5 creature is in one of the squares of the larger creature (pick the most logical one). This keeps the character from becoming say a huge or colossal creature, and makes it easy to tell where the character is for say healing spells or what have you that other players might want to cast on them.
Plus this keeps a person, say a behir's or purple worm'smouth, in a tunnel as wide as the creature from suddenly appearing behind the behir/worm.
It works well and isn't too confusing (I've seen many PCs grabbed, held, and swallowed from improved grabs in my day).
In the above example with the large creature the grappled 5x5 creature is in one of the squares of the larger creature (pick the most logical one). This keeps the character from becoming say a huge or colossal creature, and makes it easy to tell where the character is for say healing spells or what have you that other players might want to cast on them.
Plus this keeps a person, say a behir's or purple worm'smouth, in a tunnel as wide as the creature from suddenly appearing behind the behir/worm.
It works well and isn't too confusing (I've seen many PCs grabbed, held, and swallowed from improved grabs in my day).