Take a look at this: Create a Larger than 4GB Casper Partition, and How to resize casper-rw Images in Windows. The tutorials are old for ubuntu, but I think it can be used for any Linux distros.
The reason why a separate partition must be created is because the USB creator only makes one partition by default (FAT32 filesystem). Onto that partition it copies the CD or ISO contents and creates a persistence file called casper-rw. Since FAT32 can't hold larger then 4GB files the persistence file can't be any larger then 4GB.
Source: AskUbuntu
