Regular HTTP uploads use the browser's built-in capabilities to upload files to a server. The maximum file size is determined by two basic factors: the speed and amount of data the web-browser can upload before timing out, and the allowed file size determined by server settings. Note that those settings are not determined by coppermine, but the server config (php.ini). Users who are webhosted usually can't edit php.ini, so they will have to live with the settings the webserver admin has set up. Those who actually run their own server and can edit php.ini should take a look at the settings that are being explained on the upload troubleshooting page if (large) http uploads fail.
It should be obvious that the files have to be uploaded somewhere (into some folder) on your webserver - this is the albums folder within the folder you installed coppermine on your server. The HTTP uploads go into subfolders of the "userpics" folder (which resides within the "albums" folder). Obviously, the coppermine upload script needs write permissions to upload the files there. This is why you have to change permissions on the albums folder and everything within it during coppermine install - make it writable for the user the webserver runs under. This is done using the CHMOD command on Unix/Linux based servers. If you experience issues with uploading, make sure that you have set the permissions correctly.
Coppermine comes with two upload interfaces: a traditional one that is using plain HTML methods and allows uploading one file at a time and an advanced, flash-driven interface that allows several files to be uploaded from one screen.
The flash-driven interface offers more features and is easier to use, that's why it's recommended to use that interface as a default.
The HTML-driven single uploads form is recommended for those who don't have Flash installed (for whatever reasons) and particularly to trouble-shoot upload issues.