That's a definite WE CAN'T KNOW.

First of all, people complaining that the dialog appearing is a bug or the fact that it adds up to something seemingly “unreal” is a bug: no, they are wrong.

As for TextEdit, it depends on what you were trying to do. If you try to open a 50Mb text file it may actually have to allocate more memory than what is available on your system or any reasonable system. The way most text editors (and all web browsers!) work is by pre-rendering the entire document and showing you a slice of that bitmap. They don't redraw the entire window every time you navigate the document. This works very well for relatively small files (up to 2–3 Mb) but fails miserably for very long files.

I know that by being a software developer who has to deal with 10+ Mb log files on a daily basis. I just don't use TextEdit for them, it will hang and I understand why it will reasonably do so. I use vim on a Terminal. It still loads the entire file in memory but it only displays the 40 lines my terminal has visible at a time. Yes, navigating is not as fast but I'm more interested in searching the log than I am in a pretty presentation...

Therefore not only can we not declare it a definitive bug, as you were so quick to do in your ignorance, there is a very strong possibility this is the expected behavior and the real issue lies with the user doing something dumb. No, I don't think putting a hard limit on the text file size or any other artificial limitation on the usage of the application is reasonable. There are use cases where someone definitely wants to open that 20Mb text file and is willing to kill everything else on their machine to make that happen.