Sellers frequently report this problem:
This screenshot is from a VARIATION listing. Variations are currently in an illogical spot on the listing form - below item specifics and above description.
Because of that, you may get confused when trying to upload photos to that top giant blank space. On variation listings, that space can only be used for videos, not photos. Scroll down to your variations to upload variation photos.
The error message about format makes no sense and eBay should fix that, but I don't expect them to. My hope is instead they'll improve the listing form and move variations where they used to be before launch of the unified listing tool which is below category and above item specifics. More prominent visibility to the actual photos section would alleviate this frequent pain point I see sellers run into.
Hope this info helps other sellers.
UPDATE:
eBay corrected the error message. When uploading a photo to the video section of a variation listing, the error message now says the file format must be for a video file:
Format must be mp4, mov, movie or qt
