The file you are trying to upload might be too large.
Still i have same problem inside my drupal-installation, also now i tried to create direct on h5p.org via upload an existing file to change/add new picture, always same problem: The file you are trying to upload might be too large.
Of couse files are small, also changing existing image against same failed.
What happens, could be the reason? Problem exist on different content-types.