[Edit: This problem applies only to 32-bit systems. If your computer, your OS and your python implementation are 64-bit, then mmap-ing huge files works reliably and
A 32-bit program and operating system can only address a maximum of 32 bits of memory i.e. 4GB. There are other factors that make the total even smaller; for example, Windows reserves between 0.5 and 2GB for hardware access, and of course your program is going to take some space as well.
Edit: The obvious thing you're missing is an understanding of the mechanics of mmap, on any operating system. It allows you to map a portion of a file to a range of memory - once you've done that, any access to that portion of the file happens with the least possible overhead. It's low overhead because the mapping is done once, and doesn't have to change every time you access a different range. The drawback is that you need an open address range sufficient for the portion you're trying to map. If you're mapping the whole file at once, you'll need a hole in the memory map large enough to fit the entire file. If such a hole doesn't exist, or is bigger than your entire address space, it fails.