Some people are overweight because of other health issues which means that they aren't able to exercise, stand for long periods or otherwise lose that weight. So indeed they may need to have a seat, not because they are lazy and overweight (those two are so often tied together) but because they have some sort of underlying health condition or invisible disability).
It's similar to some of the worst cases when strangers look at someone who is overweight and in a wheelchair (or using a mobility scooter) and assume they are in that wheelchair because they are overweight.
I'm overweight due to health conditions. On my good days I'll stand up and give up my seat on the bus if someone needs it. It is often awkward having people pushing past me though and a squeeze if someone is the same size as me. My balance is not always great and if I fall on someone, when the bus jolts, I'm going to injure them more than if someone who has less weight will. My mother was actually injured when a large woman fell on her and had to visit the doctor and a physio because of those injuries.
I am extremely embarassed about my weight. Being overweight feels as if it is a judgement on my moral character. I have a huge amount of guilt over my weight. I do everything I can to ensure that I am not a burden to those I sit next to, so generally I'll be the one squishing myself up against a window, or perched on the end of the seat so I don't enroach in their space.
So in regards to the original post. She may have had health issues requiring her to stretch out her legs. She may just have been rude. In that situation I would have immediately moved or stood up though. I'm not sure if I'd have put my items on the chair since you just asked her to move her things and it would seem rude as if you thought your items were more important than hers. I'd have just put it down to being one of those public transport things and left it.