Firmware limitation for most of the ereaders. (Software, but not easily tweakable by the end user.) Sony readers can't read ePubs with larger than ~280kb HTML files; my PEZ froze up on some of them as well. No idea if Nooks can deal with them or not. Also no idea about phones, but for those, each PDF reading software would need to be checked.
The splitting is invisible to the end user, but most people who hand-code them put the splits where you'd put page breaks--start of a chapter or other major section.
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