They could if they wanted too... but the simplest reason is money.
They have to purchase enough bandwidth and equipment to handle the content, by keeping it small they reduce the amount of bandwidth needed.
Some sites use compression to deliver their audio/video content, others just have you download it once.... they do this for they are trying to maximize your experience while keeping their bandwidth costs down and the load to a minimum on their servers.
Ryan is correct also....a huge video would be intrusize.
The best thing to think about when going with a provider is how are they delievering your audio/video to the audience. If you are the provider, then some things you need to consider the amount of bandwidth you have available, speed of the server, types of hard drives you are using (ranked best to worse drives - solid state, SCSI, SATA, EIDE, IDE), compression, what format you want to use (.mov, .wmv, etc.), and your network card.
Hope this helped.