This policy setting enables you to specify the maximum embedded file size that users can insert directly into a OneNote notebook ...

This policy setting enables you to specify the maximum embedded file size that users can insert directly into a OneNote notebook on a SharePoint server. If you enable this policy setting, you can increase or decrease the default maximum file size of 50 MB. If you increase this value, users can insert larger files directly into the notebook, but this may reduce server performance. If you decrease this value, users can only insert smaller files directly into the notebook, which may improve server performance if OneNote sync is generating a lot of traffic.If you disable or do not configure this policy setting, users cannot insert a file larger than 50MB inserted into a OneNote notebook. Instead, the file is uploaded to a SharePoint folder and inserted as a hyperlink into the notebook.