A .uasset is Unreal Engine's binary container for a single asset. Blueprints, materials, static and skeletal meshes, textures, animations, data assets, and almost everything else in your Content folder is stored in one.
The format is packed and binary, which is what makes it efficient for the engine to load and impossible for a version control system to merge. There are no lines to reason about, and a small logical change can move bytes throughout the file. Every source control system faces this identically; it is a property of the format, not the tool.
Sizes vary enormously. A small data asset is kilobytes. A Nanite mesh carrying full-detail source geometry runs to hundreds of megabytes or beyond. A single Unreal project routinely contains both extremes in quantity, which is why version control for Unreal has to be good at large files and high file counts simultaneously.
In Unreal Engine 5, One File Per Actor added a new category: thousands of small .uasset files under `__ExternalActors__`, one per placed actor. Same format, completely different scaling characteristics.
The practical rule is unchanged since UE4: lock a .uasset before you edit it, because if two people save one, only one version survives.