Kinvey does not directly serve or accept files. Instead, the Kinvey Files API works by providing a short-lived URL to a third-party cloud storage service from which file(s) can be uploaded or downloaded. Currently, the third-party service used is Google Cloud Storage. So, Kinvey only stores the metadata of the files being uploaded and the actual file is stored on GCS. That's the reason you are seeing an entry in the Files collection even after a failed file upload. The file is not uploaded to the GCS. Please review this link for more information about File operations.
There is no such limitation of 1.5 MB for the free plan. I have tested your use-case and I am able to upload images larger than 2 MB. I would request you to 'Clear Browsing Data' for your browser and try uploading the file again. You can also try different browsers and check if you see similar behavior. Please review the request-response in the browser's developer tools so that you get more information if the request fails.