There are other limits you'll hit long before you'll hit the computers raw storage capabilities. CPU <-> RAM access takes time, CPU <-> Disk access takes ages compared. As your dataset grows you'll exhaust page caches, cpu caches, etc. and things start to slow down disproportional to access (twice more data is more than twice as slow). All modern computers have more RAM and Disk space than you can use simultaneously in a usable (human term) time frame.
They're the same image sizes we use today. And it was instantaneous, or relatively so in comparison to Photoshop 3 - which couldn't edit the images at all due to size. We would have to use a plugin to work on parts of an image most times.