I have no idea. Kobo has not published official documentation, so it is impossible to tell for sure.
What I can say is that I tried ~50MB dictionaries on my Kobo Glo, and they worked.
AFAICT, Kobo software loads only the index file into memory (called "words" --- it uses a very efficient data structure, called MARISA trie; its size only depends on the number of words in your dictionaries, not the size/length of the definitions), while it unpacks only the relevant definition file ??.html when the lookup in the index succeeds for the word selected by the user via the UI.
My suggestion is: build your dictionary and see what happens.
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