Here is what is happening:
When using file>small or file>large add a label/text to the left of the file upload field using the interface. This forces it to be a required field even when Validation Required is unchecked. If you do not add text it works fine.
In english if I type text into the interface for example "Upload Your Logo" so it appears next to the upload field, it puts a *(red asterisk) next to "Upload Your Logo*" even when the Validation Required is unchecked in the interface.