Seriously, I find stuff like "percent quality" less useful than providing data rate. It would be more helpful to offer a slider or radio buttons for various data rates, with pop-ups that roughly explain/describe quality levels.
Sorry, I'm late to this thread. Bitrate and encoding is a complex topic. I'll do my best to shed some light on what's going on here.
To answer the question from the OP, the warning is there because we had a lot of people who would push the quality all the way up to 90% or 100% and then complain that they got a much larger file with little improvement in visual quality. That's expected, because the quality slider is hooked up (inversely) to a constant quantizer parameter. The net effect is that linear increases in the quality % result in an exponential increase in file size.
So why not just remove the upper quality range as an option? Well, as pointed out in this thread, sometimes users *want* max quality, and don't care about file size. There are times when that's useful. But note that the visual quality difference between say 85% and 100% is sometimes very slight, yet the file may be *much* bigger. A larger MP4 file can cause long upload or download times, and in some cases, playback stuttering if the MP4 is placed on a network drive or other drive with slower disk access times.
Now let's talk about YouTube and Vimeo. When you upload a video to these sites, they are transcoding your video (making multiple copies of your original) at different dimensions and bitrates. This happens during the "processing" step, which begins immediately after the upload completes. This is done so that they can optimize the viewing experience for many different devices, bandwidths, etc. So the video you're watching on YouTube isn't actually the same bits you uploaded. Knowing that fact changes things a bit. Since the video coming out of Camtasia isn't the video being downloaded by your viewer, the file size only affects your upload time to YouTube and Vimeo, and this has no effect on the experience of the viewer, because these sites will fix that for you. So for YouTube and Vimeo, the video and audio quality are the most important things. The encoding guidelines are given to help you upload videos of high quality.
Ok, onto bitrate. The bitrate setting on an encoder is a constraint. It sets a target or max amount of bits (file size) that the encoder is allowed to use for a second of video. If a section of video hits this cap, the encoder lowers the visual quality for that section in order to meet the bitrate constraint. If the bitrate is not allowed to vary, and the bitrate is too low, the video may have complex, high motion sections that are blocky or blurry. Starting from that video, you can't get that quality back. You have to re-produce starting from the original at a higher bitrate so that those sections don't hit the bitrate constraint. That's why YouTube and Vimeo list bitrates that are on the high side. They don't want you to upload video that's been over compressed, because they can't do anything to fix it.
But there's another way to encode video. It's called constant quality variable bitrate encoding. The idea here is to NOT put a bitrate constraint on the encoder. Instead, we allow the bitrate to vary, as needed, according to the complexity of the video. This has the desirable effect that the video maintains a similar visual quality throughout, while only using as much file size as is necessary for a particular section of video. The result is a well compressed video that doesn't get blocky or blurry during any high motion sequences.
This second approach is Camtasia's default for MP4. For complex sections of the video, it will use a higher bitrate than for less complex sections. So the content of the video affects the file size. This is where screen recordings are different than camera footage. Consider a recording of your screen at 30 frames per sec. Most of the time, the screen is very static and doesn't change much from one frame to the next. There's a lot of redundant temporal information, and that makes the video highly compressible. The same is not true with real world video that you record with your phone or video camera, especially if there's motion from the camera, or from whatever is being filmed. This content is less compressible, and generally requires a larger size to maintain the same visual quality.
So why does Vimeo sometimes warn when you upload a video from Camtasia? Put simply, because the video is smaller than they expect. They look at the file size of the video, and the length, and if it's smaller than a threshold, they guess that the video may be of low visual quality. But is it? Watch it and decide for yourself. The important thing is that you're uploading something of high visual quality. Well compressed camera video is going to be much larger than well compressed screen video. Their threshold probably works well for camera video, but not to low-motion screen video.
Sorry for the long post. As I said in the beginning, bitrate is a complicated topic. If you've read this far, I hope you've found this post helpful.