With the insert link macro in Confluence you can create a link on a page to an attachment present on the instance. You can also upload attachments through this macro, however when doing this with larger files, you get the message "could not upload the file to confluence, the server may be unavailable". This goes for OnDemand, I have not been able to reproduce it on download. I think it simply times out causing larger file sizes to produce this message. When testing this surfaced with files between 25 and 30 MB, I do not think this is extremely relevant, since it can also be related to upload speed.
Files can get uploaded to the instance as normally through the attachment macro without limitation in size (other than the instance set max)
- Use the drag-and-drop feature to upload the image. This is uploaded using a different mechanism and doesn't seem to be subject to the same timeout.
- Go to "Tools" -> "Attachments" and upload the image there. It's also not subject to the same timeout.