The cache treats small, medium, and large files differently. The contents of medium files are cached by mapping the file into virtual memory (Unix/Linux platforms). The contents of small files are cached by allocating heap space and reading the file into it. The contents of large files are not cached, although information about large files is cached.
The advantage of distinguishing between small files and medium files is to avoid wasting part of many pages of virtual memory when there are lots of small files. So the Small File Size Limit is typically a slightly lower value than the VM page size.