It can: iCloud Mail does have an upper message size limit — for sentiments, message text and attached files. Messages exceeding that limit will not be delivered to their recipients if you try to send them through iCloud Mail, and people trying to send you emails that are too large will get back an error message.
iCloud Mail Message and Attachment Size Limits
iCloud Mail lets you
- send and receive
- messages up to 20 MB (20480 KB) in size.
This limit includes the message text and attachments. Note that encoding typically increases the size of files (by about a third) other than plain-text ASCII documents when they are attached to an email.
To send files that would bump an email over iCloud Mail's message size limit, you can use a big file sending service.
(Updated August 2012)