That would generally indicate the image is bigger than what can be handled by your server. In PHP, the most common setting would be post_max_size (and maybe upload_max_filesize), though it could happen from a web server configuration. These would need to be increased in your PHP config (before XenForo gets involved).
A few of my users on mobile are still experiencing issues uploading files. It's not their phones or connections as they claim they can upload the same pics to facebook without issues, here is one for example, image filesize is 2.09MB and dimensions are 4128 x 2322. My XF attachment options are set to 1024 x 768 and 4MB upload. Could it be the 1024 x 768 setting? I thought that was only to determine the size of the pic in the actual post. Where else can I check to see what may be causing this? Thank You.