I am wondering how is the hidden field named MAX_FILE_SIZE
supposed to work?
It's only supposed to send the information to the server. The reason that it must preceed the file field is that it has to come before the file payload in the request for the server to be able to use it to check the size of the upload.
How the value is used on the server depends on what you use to take care of the upload. The code is supposedly intended for a specific upload component that specifically looks for that value.
It seems that the built in upload support in PHP is one to use this field value.