There's only a small size limit (Here it's set to 5MB). I know the error message doesn't tell you that's the issue, but I don't think your error message is what I've seem. Maybe you can't upload videos? Or maybe it failed because it's too big, and the error is because something else failed because the file didn't upload.
In any case, it's encouraged to use a video website rather than uploading it as it could get heavy for the server to store and send to users (if for example someone on lemmy.world views a post on lemmy.nz, the post text is mirrored on lemmy.world but the media comes directly from lemmy.nz).
You might consider YouTube or similar, though I think more traditionally for Fediverse sites you'd use Peertube. Perhaps you could consider https://peertube.nz