Size limits aren't arbitrary. Email format translates attachments to ASCII which makes them larger and harder to process. Mail servers need to scan and handle messages which means they will need to impose limits to be able to work well. Back in the day when Gmail didn't it quickly started being abused by people using it as online storage.

Encryption is difficult to implement with a system that performs multi-point handoff, and works against some use cases like corporate use where you want virus scanning.

Try to design an alternative email system and you'll see how quickly you start losing features that make it interesting and useful. For example, for all its faults email is very user-centric and portable, you can easily take your domain and move your addresses to a different provider. How many other communication services can you say that about?