All I will add is that after reading these messages, I more confused than when I started. I especially have no clue what the yes/no setting actually does if I select "No". I have to agree with previous posters that it is not very intuitive.
I was previously using VBGallery. Very simple setting there to resize images over a certain size.
I just tried uploading some large images. I would like them to resize to a max of say 640kb. I do not know if it is because I exceed the file size limit but it goes through the upload process, looks like it completed, and then there is no image present of any size?