Since the player will auto-purge files using least used file get delete first methodology, using large file will definitely creates some weird scenario such as delete & download forever.
A simple diagram illustrated what is normal download, update & purge will work:
When files are exceed threshold will get deleted. Therefore, the recommended single file size should be "80% of maximum file size (HD: 1.6GB, SD: 800MB)" or "smaller than buffer space". If your new file are exceed buffer size, it will easily failed to download due to file cannot be deleted (is currently using) or black screen will show when current playback file has been deleted.
Since the recommended file size varies depends on storage size, a formula should help to determine the recommended sizes: (note: threshold: 20% of total storage)
1. Total playlist: (Total space - threshold) / 2 (leave half of space for buffer) = 40% of total storage
2. Max. single file size: 80% of maximum file size (HD: 1.6GB, SD: 800MB) or buffer space
When applies to our standard 4GB HD player, it looks like:
1. Total playlist: 1.6GB
2. Max. single file size: 1.6GB
SD player, it looks like:
1. Total playlist: 800MB
2. Max. single file size: 800MB
A simpler rule is not to use large file (i.e. >500MB)
One last thing, whenever using file > 200MB, it is recommended to use a host that support resume. The player support resume in following conditions:
1. Server support resume
2. File name & size & last modified time are the same