Community Server Media Gallery Upload utilizes the Community Server REST API.

Uploading files greater than 2MB may cause the API to timeout. A solution is being investigated.

Updated: Solution below

Follow this document to increase the maximum file size and timeout for your Community Server installation.

http://docs.communityserver.com/general-topics/allowing-users-to-upload-files-greater-than-4-mbytes/

Thanks for afscrome at http://askcrome.co.uk/ for his answer.