Policy size exceeds identity policy quota: The characters in the identity policy, excluding whitespace, exceed the character maximum for inline and managed policies. We recommend that you use multiple granular policies.
In AWS Console -
In Terraform -
References:
https://docs.aws.amazon.com/IAM/latest/UserGuide/service_code_examples_iam.html
https://docs.aws.amazon.com/IAM/latest/UserGuide/reference_iam-quotas.html
https://registry.terraform.io/providers/hashicorp/aws/latest/docs/resources/iam_policy