Messages cannot be larger than 65536 bytes

While it is true that the maximum size of a message can be 64KB however Azure uses UTF16 encoding to store the data thus for each byte of data that you provide, Azure Storage uses 2 bytes to store that data.

What this means is that you can essentially store up to 32KB of data in a message in an Azure Queue. Because you're exceeding this 32KB limit, you're getting this error.