A 413 error on a file that uploads fine over SFTP is not a contradiction — the two paths a file can take onto the server are not the same size of pipe, and the limit exists specifically to protect the smaller one.
Why the browser path has a ceiling SFTP does not
Uploading through the browser file manager routes the entire file through the web server process itself as part of a single HTTP request, which has to hold or buffer that data before it ever reaches disk. An SFTP client, by contrast, streams a file directly to disk over its own connection with no web request involved at all. The 1024 MB cap on browser uploads exists to stop one enormous request from tying up the same web tier every other panel user's page loads depend on — SFTP was never routed through that tier in the first place, so it has no equivalent limit to hit.
A large modpack or world archive uploads successfully via an SFTP client using the same credentials shown under SFTP Details, with no size-related error.