OK I'm about to sleep but if I'm not clear as to what my issue was ill try and replicate it tomorrow...
I had an avatar who's file size was 130 kb and went to upload another that was smaller substancially and it said that I exceeded the maximum file size of ??( i don't remember exactly) I had switched my avatar twice without navigating away from the page I was at if that makes any difference. If there isn't an obvious thing to explain this I will capture my screen to display what I saw if I can duplicate it again.
There is a max size in bytes (after resizing to the largest size), to ensure that avatars don't get too large. I believe it's 30k, which generally should fit within the 192px-wide dimensions, unless it's a big animated GIF. This is configurable per group.
They're at different dimensions though. We resize the 400x400 one down and that gets inside the file size we need; the 192x192 one is within the limits, so it doesn't get resized and is too large. We may investigate resizing when the dimensions are ok but the file size isn't, but that's a future thing.