Why the limits exist and why they are so tight
Portals handling millions of applications store several images per applicant, and a limit of 50 KB rather than 500 KB is the difference between terabytes and tens of terabytes. Many of these systems were specified when bandwidth in much of the country was scarce, and the limits have outlived the constraint.
The consequence for applicants is a genuine constraint rather than a suggestion: an upload one kilobyte over is rejected outright, usually with an unhelpful message.