If you're seeing this confusing WordPress error when trying to upload the theme, it means the process breaks at some point and that's most probably due to a few server settings limiting resources for your site. For example the maximum upload size could be set to 5MB and the theme's package is larger than that (e.g. 8MB). This isn't a bug but a matter of server settings and you should increase that limit to at least 12MB otherwise, even uploading a larger image could cause the same issue.

You can either reach out to your hosting company and ask them to increase it for your, or read more about how to do it yourself: How to Increase the Maximum File Upload Size in WordPress on wpbeginner.com.