Lol yes the message is actually funny. Not sure why it would write that in reality, never saw it happen.
So, in general its a bad idea to have huge files with code.
Not just because of AI context limit but also for humans to handle them.
Too big files are often a sign that a project is not well structured and the concerns of each file/class/function etc are not separate from each other.
It also seems you are not using the Chat window with the integrated ‘Agent’ which would create that file for you easier than in the ‘editor’ part of Cursor.