Create an empty file of the required size:

sudo dd if=/dev/zero of=/fsfile bs=1024 count=1000000

The output of the previous command would be as follows:

1000000+0 records in
1000000+0 records out
1024000000 bytes (1.0 GB) copied, 8.44173 s, 121 MB/s

Create a file system on the file:

sudo mkfs.ext4 -F /fsfile

The output of the previous command would be as follows:

mke2fs 1.44.6 (5-Mar-2019)
Discarding device blocks: done                            
Creating filesystem with 250000 4k blocks and 62592 inodes
Filesystem UUID: 17ef1d96-c595-4f19-891b-112a56b54c82
Superblock backups stored on blocks: 
	32768, 98304, 163840, 229376

Allocating group tables: done                            
Writing inode tables: done                            
Creating journal (4096 blocks): done
Writing superblocks and filesystem accounting information: done

Mount the file as a file system by using a loop device:

sudo mount -o loop /fsfile /mnt

The file appears as a normal file system when you run the sudo mount command:

...
/fsfile on /mnt type ext4 (rw,loop=/dev/loop0)

sudo df -h

Filesystem            Size  Used Avail Use% Mounted on
...
/fsfile               962M   18M  896M   2% /mnt

If required, create a permanent entry for the file system in /etc/fstab:

/fsfile          /mnt      ext4    rw,loop     0 0