This is a limit on what's called the "flow size" - the size of an individual file within the ePub container. Only the older Sony readers (PRS-300, 500, 505, 600, and 700) have this limit; the newer models (and all other reading devices that use ADE) use a more recent version of ADE that doesn't impose a flow size limit (or, if they do, it's much larger).
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